Ascomycin (FK520) is a structurally complex macrolide with immunosuppressant activity produced by Streptomyces hygroscopicus. The biosynthetic origin of C12-C15 and the two methoxy groups at C13 and C15 has been unclear. It was previously shown that acetate is not incorporated into C12-C15 of the macrolactone ring. Here, the acyl transferase (AT) of domain 8 in the ascomycin polyketide synthase was replaced with heterologous ATs by double homologous recombination. When AT8 was replaced with methylmalonyl-CoA-specific AT domains, the strains produced 13-methyl-13-desmethoxyascomycin, whereas when AT8 was replaced with a malonyl-specific domain, the strains produced 13-desmethoxyascomycin. These data show that ascomycin AT8 does not use malonyl-or methylmalonyl-CoA as a substrate in its native context. Therefore, AT8 must be specific for a substrate bearing oxygen on the ␣ carbon. Feeding experiments showed that [ 13 C]glycerol is incorporated into C12-C15 of ascomycin, indicating that both modules 7 and 8 of the polyketide synthase use an extender unit that can be derived from glycerol. When AT6 of the 6-deoxyerythronolide B synthase gene was replaced with ascomycin AT8 and the engineered gene was expressed in Streptomyces lividans, the strain produced 6-deoxyerythronolide B and 2-demethyl-6-deoxyerythronolide B. Therefore, although neither malonylCoA nor methylmalonyl-CoA is a substrate for ascomycin AT8 in its native context, both are substrates in the foreign context of the 6-deoxyerythronolide B synthase. Thus, we have demonstrated a new specificity for an AT domain in the ascomycin polyketide synthase and present evidence that specificity can be affected by context. Ascomycin (FK520) is closely related to tacrolimus (FK506), which is used to prevent xenograft rejection in human patients. Dosing of tacrolimus is difficult because metabolism varies between patients and different co-administered drugs (1-3). Because initial metabolism is due to cytochrome P450-mediated demethylation of the 13-methoxy group (4, 5), we wished to replace the 13-methoxy group with a hydrogen or methyl group and determine whether this increased metabolic stability. Because these analogues could not be obtained by current chemical methods, we sought the desired analogues of ascomycin modified at C13 (Fig. 1) using PKS 1 engineering (6, 7). The macrolactone precursor of ascomycin is biosynthesized by a large PKS complex consisting of a loading module for a shikimate-derived starter unit; 10 modules for malonyl, methylmalonyl, or other PKS extender units; and a peptide synthetase module for addition of pipecolate (8 -13). FK520 and FK506 have methoxy groups at C13 and C15, which could be derived by post-PKS hydroxylation followed by O-methylation or by direct incorporation of an extender unit with an oxygen at the ␣ carbon. Feeding of [ 13 C 2 ]acetate was reported to label C8-C9 and C20-C23 of the macrolactone ring, as expected, but not C12-C15 in either FK520 or FK506 (8). A [1-13 C]erythrose feed, used to establish that the dihydrox...