Monascustin (1), an unusual γ-lactam, was isolated from an ethanol extract of the Monascus purpureus fermented rice. Its structure including the absolute configuration was determined by spectroscopic data analysis and confirmed by X-ray crystallography. A plausible biosynthetic pathway is discussed on the basis of amino acid derivatization. Compound 1 showed inhibitory activity against histone deacetylase 1.