C−C bond‐forming reactions are key transformations for setting up the carbon frameworks of organic compounds. In this context, Friedel–Crafts acylation is commonly used for the synthesis of aryl ketones, which are common motifs in many fine chemicals and natural products. A bacterial multicomponent acyltransferase from
Pseudomonas protegens
(
Pp
ATase) catalyzes such Friedel–Crafts C‐acylation of phenolic substrates in aqueous solution, reaching up to >99 % conversion without the need for CoA‐activated reagents. We determined X‐ray crystal structures of the native and ligand‐bound complexes. This multimeric enzyme consists of three subunits: PhlA, PhlB, and PhlC, arranged in a Phl(A
2
C
2
)
2
B
4
composition. The structure of a reaction intermediate obtained from crystals soaked with the natural substrate 1‐(2,4,6‐trihydroxyphenyl)ethanone together with site‐directed mutagenesis studies revealed that only residues from the PhlC subunits are involved in the acyl transfer reaction, with Cys88 very likely playing a significant role during catalysis. These structural and mechanistic insights form the basis of further enzyme engineering efforts directed towards enhancing the substrate scope of this enzyme.