Tetracyclines are aromatic polyketides biosynthesized by bacterial type II polyketide synthases (PKSs). Understanding the biochemistry of tetracycline PKSs is an important step toward the rational and combinatorial manipulation of tetracycline biosynthesis. To this end, we have sequenced the gene cluster of oxytetracycline (oxy and otc genes) PKS genes from Streptomyces rimosus. Sequence analysis revealed a total of 21 genes between the otrA and otrB resistance genes. We hypothesized that an amidotransferase, OxyD, synthesizes the malonamate starter unit that is a universal building block for tetracycline compounds. In vivo reconstitution using strain CH999 revealed that the minimal PKS and OxyD are necessary and sufficient for the biosynthesis of amidated polyketides. A novel alkaloid (WJ35, or compound 2) was synthesized as the major product when the oxy-encoded minimal PKS, the C-9 ketoreductase (OxyJ), and OxyD were coexpressed in CH999. WJ35 is an isoquinolone compound derived from an amidated decaketide backbone and cyclized with novel regioselectivity. The expression of OxyD with a heterologous minimal PKS did not afford similarly amidated polyketides, suggesting that the oxy-encoded minimal PKS possesses novel starter unit specificity.