Enediyne antibiotics are known for their potent antitumor activities. One such enediyne, neocarzinostatin (NCS), consists of a 1:1 complex of non-peptide chromophore (1a), and peptide apoprotein. The structurally diverse nonpeptide chromophore is responsible for its biological activity. One of its structural components, the naphthoic acid moiety (2,7-dihydroxy-5-methyl-1-naphthoic acid, 1d) is synthesized by a polyketide synthase (PKS) pathway through condensing six intact acetate units. The 5.45 kb iterative type I PKS, neocarzinostatin naphthoate synthase (NNS), responsible for naphthoic acid moiety biosynthesis, shares sequence homology with 6-methyl salicylic acid synthase of fungi and orsellinic acid synthases (AviM and CalO5) of Streptomyces origin. Cultures of S. lividans TK24 and S. coelicolor YU105 containing plasmids with NNS were able to produce 2-hydroxy-5-methyl-1-naphthoic acid (2a), a key intermediate of naphthoic acid moiety in NCS. In addition to 2a, a novel product, 2-hydroxy-5-hydroxymethyl-1-naphthoic acid (2d) was isolated. This is the first report of a bacterial iterative type I PKS from an enediyne producer which enables the biosynthesis of bicyclic aromatic compounds.