Polyether ionophores, such as monensin A, are known to be biosynthesised, like many other antibiotic polyketides, on giant modular polyketide synthases (PKSs), but the intermediates and enzymes involved in the subsequent steps of oxidative cyclisation remain undefined. In particular there has been no agreement on the mechanism and timing of the final polyketide chain release. We now report evidence that MonCII from the monensin biosynthetic gene cluster in Streptomyces cinnamonensis, which was previously thought to be an epoxide hydrolase, is a novel thioesterase that belongs to the alpha/beta-hydrolase structural family and might catalyse this step. Purified recombinant MonCII was found to hydrolyse several thioester substrates, including an N-acetylcysteamine thioester derivative of monensin A. Further, incubation with a hallmark inhibitor of such enzymes, phenylmethanesulfonyl fluoride, led to inhibition of the thioesterase activity and to the accumulation of an acylated form of MonCII. These findings require a reassessment of the role of other enzymes implicated in the late stages of polyether ionophore biosynthesis.