<jats:title>Summary</jats:title><jats:p>The analysis of a candidate biosynthetic gene cluster (97 kbp) for the polyether ionophore monensin from <jats:italic>Streptomyces cinnamonensis</jats:italic> has revealed a modular polyketide synthase composed of eight separate multienzyme subunits housing a total of 12 extension modules, and flanked by numerous other genes for which a plausible function in monensin biosynthesis can be ascribed. Deletion of essentially all these clustered genes specifically abolished monensin production, while overexpression in <jats:italic>S. cinnamonensis</jats:italic> of the putative pathway‐specific regulatory gene <jats:italic>monR</jats:italic> led to a fivefold increase in monensin production. Experimental support is presented for a recently‐proposed mechanism, for oxidative cyclization of a linear polyketide intermediate, involving four enzymes, the products of <jats:italic>monBI</jats:italic>, <jats:italic>monBII</jats:italic>, <jats:italic>monCI</jats:italic> and <jats:italic>monCII</jats:italic>. In frame deletion of either of the individual genes <jats:italic>monCII</jats:italic> (encoding a putative cyclase) or <jats:italic>monBII</jats:italic> (encoding a putative novel isomerase) specifically abolished monensin production. Also, heterologous expression of <jats:italic>monCI</jats:italic>, encoding a flavin‐linked epoxidase, in <jats:italic>S. coelicolor</jats:italic> was shown to significantly increase the ability of <jats:italic>S. coelicolor</jats:italic> to epoxidize linalool, a model substrate for the presumed linear polyketide intermediate in monensin biosynthesis.