c Lipstatin, isolated from Streptomyces toxytricini as a potent and selective inhibitor of human pancreatic lipase, is a precursor for tetrahydrolipstatin (also known as orlistat, Xenical, and Alli), the only FDA-approved antiobesity medication for long-term use. Lipstatin features a 2-hexyl-3,5-dihydroxy-7,10-hexadecadienoic--lactone structure with an N-formyl-L-leucine group attached as an ester to the 5-hydroxy group. It has been suggested that the ␣-branched 3,5-dihydroxy fatty acid -lactone moiety of lipstatin in S. toxytricini is derived from Claisen condensation between two fatty acid substrates, which are derived from incomplete oxidative degradation of linoleic acid based on feeding experiments. In this study, we identified a six-gene operon (lst) that was essential for the biosynthesis of lipstatin by large-deletion, complementation, and single-gene knockout experiments. lstA, lstB, and lstC, which encode two -ketoacyl-acyl carrier protein synthase III homologues and an acyl coenzyme A (acyl-CoA) synthetase homologue, were indicated to be responsible for the generation of the ␣-branched 3,5-dihydroxy fatty acid backbone. Subsequently, the nonribosomal peptide synthetase (NRPS) gene lstE and the putative formyltransferase gene lstF were involved in decoration of the ␣-branched 3,5-dihydroxy fatty acid chain with an N-formylated leucine residue. Finally, the 3-hydroxysteroid dehydrogenase-homologous gene lstD might be responsible for the reduction of the -keto group of the biosynthetic intermediate, thereby facilitating the formation of the unique -lactone ring.