Diverse 2-pyridone alkaloids have been identified with an array of biological and pharmaceutical activities, including the development of drugs. However, the biosynthetic regulation and chemical ecology of 2-pyridones remain largely elusive. Here, we report the inductive activation of the silent polyketide synthase-nonribosomal peptide synthetase (PKS-NRPS) (tenS) gene cluster for the biosynthesis of the tenellin-type 2-pyridones in the insect-pathogenic fungus Beauveria bassiana when cocultured with its natural competitor fungus Metarhizium robertsii. A pathway-specific transcription factor, tenR, was identified, and the overexpression of tenR well expanded the biosynthetic mechanism of 15-hydroxytenellin (15-HT) and its derivatives. In particular, a tandemly linked glycosyltransferase-methyltransferase gene pair located outside the tenS gene cluster was verified to mediate the rare and site-specific methylglucosylation of 15-HT at its N-OH residue. It was evident that both tenellin and 15-HT can chelate iron, which could benefit B. bassiana to outcompete M. robertsii in cocultures and to adapt to iron-replete and -depleted conditions. Relative to the wild-type strain, the deletion of tenS had no obvious negative effect on fungal virulence, but the overexpression of tenR could substantially increase fungal pathogenicity toward insect hosts. The results of this study well advance the understanding of the biosynthetic machinery and chemical ecology of 2-pyridones. IMPORTANCE Different 2-pyridones have been identified, with multiple biological activities but unclear chemical ecology. We found that the silent tenS gene cluster was activated in the insect pathogen Beauveria bassiana when the fungus was cocultured with its natural competitor Metarhizium robertsii. It was established that the gene cluster is regulated by a pathway-specific regulator, tenR, and the overexpression of this transcription factor expanded the biosynthetic machinery of the tenellin 2-pyridones. It was also found that the paired genes located outside the tenS cluster contribute to the site-specific methylglucosylation of the main compound 15-hydroxytenellin. Both tenellin and 15-hydroxytenellin can chelate and sequester iron to benefit the producing fungus to compete for different niches. This study well advances the biosynthetic mechanism and chemical ecology of 2-pyridones. Copyright © 2021 Chen et al.