Enantioselective methylation is a challenging task in organic chemistry, yet often desirable in drug discovery and optimization. S-Adenosyl methionine (SAM)-dependent methyltransferases (MTases) offer a selective alternative to chemical synthesis and an abundance of potential scaffolds. The crystal structure of C3-indole MTase PsmD from Streptomyces griseofuscus, involved in the biosynthesis of the acetylcholinesterase inhibitor physostigmine, was determined via X-ray crystallography. The amino acid residues essential for catalysis were identified by site-directed mutagenesis, and a mechanism of action was proposed. Furthermore, a PsmD ortholog was identified and characterized. The variant catalyzed enantioselective C-methylation over a broad substrate scope while displaying increased stability. Using this enzyme, preparative-scale enzymatic methylation was performed in cell-free extracts in combination with an SAM recycling system, eliminating the need for cofactor supplementation.