<jats:title>Abstract</jats:title><jats:p>JBIR‐76 and ‐77 are isofuranonaphthoquinones (IFNQs) isolated from <jats:italic>Streptomyces</jats:italic> sp. RI‐77. Draft genome sequencing and gene disruption analysis of <jats:italic>Streptomyces</jats:italic> sp. RI‐77 showed that a type II polyketide synthase (PKS) gene cluster (<jats:italic>ifn</jats:italic> cluster) was responsible for the biosynthesis of JBIR‐76 and ‐77. It was envisaged that an octaketide intermediate (C<jats:sub>16</jats:sub>) could be synthesized by the minimal PKS (IfnANO) and that formation of the IFNQ scaffold (C<jats:sub>13</jats:sub>) would therefore require a C−C bond cleavage reaction. An <jats:italic>ifnQ</jats:italic> disruptant accumulated some shunt products (C<jats:sub>15</jats:sub>), which were presumably produced by spontaneous cyclization of the decarboxylated octaketide intermediate. Recombinant IfnQ catalyzed the Baeyer–Villiger oxidation of 1‐(2‐naphthyl)acetone, an analogue of the bicyclic octaketide intermediate. Based on these results, we propose a pathway for the biosynthesis of JBIR‐76 and ‐77, involving IfnQ‐catalyzed C−C bond cleavage as a key step in the formation of the IFNQ scaffold.