The bacterium Streptomyces anulatus 9663, isolated from the intestine of different arthropods, produces prenylated derivatives of phenazine 1-carboxylic acid. From this organism, we have identified the prenyltransferase gene ppzP. ppzP resides in a gene cluster containing orthologs of all genes known to be involved in phenazine 1-carboxylic acid biosynthesis in Pseudomonas strains as well as genes for the six enzymes required to generate dimethylallyl diphosphate via the mevalonate pathway. This is the first complete gene cluster of a phenazine natural compound from streptomycetes. Heterologous expression of this cluster in Streptomyces coelicolor M512 resulted in the formation of prenylated derivatives of phenazine 1-carboxylic acid. After inactivation of ppzP, only nonprenylated phenazine 1-carboxylic acid was formed. Cloning, overexpression, and purification of PpzP resulted in a 37-kDa soluble protein, which was identified as a 5,10-dihydrophenazine 1-carboxylate dimethylallyltransferase, forming a C-C bond between C-1 of the isoprenoid substrate and C-9 of the aromatic substrate. In contrast to many other prenyltransferases, the reaction of PpzP is independent of the presence of magnesium or other divalent cations. The K(m) value for dimethylallyl diphosphate was determined as 116 microm. For dihydro-PCA, half-maximal velocity was observed at 35 microm. K(cat) was calculated as 0.435 s(-1). PpzP shows obvious sequence similarity to a recently discovered family of prenyltransferases with aromatic substrates, the ABBA prenyltransferases. The present finding extends the substrate range of this family, previously limited to phenolic compounds, to include also phenazine derivatives.