Cyclodipeptide synthases (CDPSs) catalyze the formation of cyclodipeptides using aminoacylated tRNAs as the substrates and have great potential in the production of diverse 2,5-diketopiperazines (2,5-DKPs). Genome mining of Streptomyces leeuwenhoekii NRRL B-24963 revealed a two-gene locus, saz, encoding CDPS SazA and a unique fused enzyme (SazB) harboring two domains: phytoene synthase-like prenyltransferase (PT) and methyltransferase (MT). Heterologous expression of the saz gene(s) in Streptomyces albus J1074 led to the production of four prenylated indole alkaloids, among which streptoazines A to C (compounds 3 to 5) are new compounds. Expression of different gene combinations showed that the SazA catalyzes the formation of cyclo(l-Trp-l-Trp) (cWW; compound 1), followed by consecutive prenylation and methylation by SazB. Biochemical assays demonstrated that SazB is a bifunctional enzyme, catalyzing sequential C-3/C-3' prenylation(s) by SazB-PT and N-1/N-1' methylation(s) by SazB-MT. Of note, the substrate selectivity of SazB-PT and SazB-MT was probed, revealing the stringent specificity of SazB-PT but relative flexibility of SazB-MT.IMPORTANCE Natural products with a 2,5-diketopiperazine (2,5-DKP) skeleton have long sparked interest in drug discovery and development. Recent advances in microbial genome sequencing have revealed that the potential of cyclodipeptide synthase (CDPS)-dependent pathways encoding new 2,5-DKPs are underexplored. In this study, we report the genome mining of a new CDPS-encoding two-gene operon and activation of this cryptic gene cluster through heterologous expression, leading to the discovery of four indole 2,5-DKP alkaloids. The cyclo(l-Trp-l-Trp) (cWW)-synthesizing CDPS SazA and the unusual prenyltransferase (PT)-methyltransferase (MT) fused enzyme SazB were characterized. Our results expand the repertoire of CDPSs and associated tailoring enzymes, setting the stage for accessing diverse prenylated alkaloids using synthetic biology strategies. CI - Copyright (c) 2021 American Society for Microbiology.