Indole terpenoids encompass a highly diverse group of natural products, including infamous psychotropic agents such as lysergic acid derivatives, the aphrodisiac yohimbine, and the potassium channel blockers paxilline and lolitrem.[1] What is remarkable about this multifarious class is that practically all indole terpene alkaloids have been isolated from plants and fungi.[2] Stimulated by the importance of these synthetically challenging compounds, groundbreaking studies have been undertaken in recent years to understand and engineer terpene alkaloid pathways in fungi and plants.[3] In light of the impressive number of known eukaryotic indole terpene metabolites, it is peculiar that only recently the first bacterial representatives of this group were discovered. We and others independently reported the structures of pentacyclic indolocarbazoles from Streptomyces spp., namely the diastereomers oridamycin (1) [4] and xiamycin A (2; Scheme 1).[5] Considering that these indolosesquiterpenes (IST) are reminiscent of plant metabolites, it is astounding that two xiamycin-producing strains are endophytes of widespread mangrove trees, Bruguiera gymnorrhiza[5] and Kandelia candel. [6] A more detailed metabolic investigation of the K. candel endophyte revealed three congeners of 2, xiamycin B (3), the seco-derivative indosespene (4), and the novel bridged spiro compound sespenine (5).[6] These rare endophyte metabolites likely play an ecological role in their habitats because their diverse antiviral, antibacterial, and antifungal activities may contribute to the antibiotic reservoir of the mangrove plants.[7] From a chemical point of view, the co-occurrence of these structurally novel alkaloids is intriguing because it suggests a common biogenetic origin. However, to date nothing is known about the biosynthesis of indole terpenes in bacteria. Herein we unveil the molecular basis for unprecedented bacterial indolosesquiterpene biosynthesis in a mangrove endophyte and show by heterologous gene expression and mutational analysis that the unusual pentacyclic ring systems of xiamycin and sespenine are formed by a novel cyclization sequence. Furthermore, we report the discovery of three new xiamycin dimers from a heterologously reconstituted IST pathway.