<jats:title>ABSTRACT</jats:title> <jats:p> Lipstatin, isolated from <jats:named-content content-type="genus-species">Streptomyces toxytricini</jats:named-content> as a potent and selective inhibitor of human pancreatic lipase, is a precursor for tetrahydrolipstatin (also known as orlistat, Xenical, and Alli), the only FDA-approved antiobesity medication for long-term use. Lipstatin features a 2-hexyl-3,5-dihydroxy-7,10-hexadecadienoic-β-lactone structure with an <jats:italic>N</jats:italic> -formyl- <jats:sc>l</jats:sc> -leucine group attached as an ester to the 5-hydroxy group. It has been suggested that the α-branched 3,5-dihydroxy fatty acid β-lactone moiety of lipstatin in <jats:named-content content-type="genus-species">S. toxytricini</jats:named-content> is derived from Claisen condensation between two fatty acid substrates, which are derived from incomplete oxidative degradation of linoleic acid based on feeding experiments. In this study, we identified a six-gene operon ( <jats:italic>lst</jats:italic> ) that was essential for the biosynthesis of lipstatin by large-deletion, complementation, and single-gene knockout experiments. <jats:italic>lstA</jats:italic> , <jats:italic>lstB</jats:italic> , and <jats:italic>lstC</jats:italic> , which encode two β-ketoacyl–acyl carrier protein synthase III homologues and an acyl coenzyme A (acyl-CoA) synthetase homologue, were indicated to be responsible for the generation of the α-branched 3,5-dihydroxy fatty acid backbone. Subsequently, the nonribosomal peptide synthetase (NRPS) gene <jats:italic>lstE</jats:italic> and the putative formyltransferase gene <jats:italic>lstF</jats:italic> were involved in decoration of the α-branched 3,5-dihydroxy fatty acid chain with an N-formylated leucine residue. Finally, the 3β-hydroxysteroid dehydrogenase-homologous gene <jats:italic>lstD</jats:italic> might be responsible for the reduction of the β-keto group of the biosynthetic intermediate, thereby facilitating the formation of the unique β-lactone ring.