The alpha-diketone 4 was shown to be the open-chain biosynthetic precursor of the fungal metabolite oudenone (1a and 1b). Intact incorporation of 4 into 1 was achieved upon incubation of a (2)H-labeled, N-acetylcysteamine thioester derivative of 4 with growing cultures of Oudemansiella radicata. A biosynthetic scheme for the formation of the hexaketide 4 and its enzymatic cyclization into oudenone (1), consistent with the experimental data, is described. The proposed mechanism for the cyclization of 4 to 1 is analogous to the "polyepoxide cascade" model, which has been previously implicated in the biosynthesis of polyether antibiotics.