Fungal highly reducing polyketide synthases (HRPKSs) biosynthesize polyketides using a single set of domains iteratively. Product release is a critical step in HRPKS function to ensure timely termination and enzyme turnover. Nearly all of the HRPKSs characterized to date employ a separate thioesterase (TE) or acyltransferase enzyme for product release. In this study, we characterized two fungal HRPKSs that have fused C-terminal TE domains, a new domain architecture for fungal HRPKSs. We showed that both HRPKS-TEs synthesize aminoacylated polyketides in an ATP-independent fashion. The KU42 TE domain selects cysteine and homocysteine, and catalyzes transthioesterification using the side chain thiol group as the nucleophile. In contrast, the KU43 TE domain selects leucine methyl ester and performs a direct amidation of the polyketide, a reaction typically catalyzed by nonribosomal peptide synthetase (NRPS) domains. The characterization of these HRPKS-TE enzymes showcase the functional diversity of HRPKS enzymes, and provides potential TE domains as biocatalytic tools to diversify HRPKS structures.