Macrophomate synthase from the fungus Macrophoma commelinae IFO 9570 is a Mg(II)-dependent dimeric enzyme that catalyzes an extraordinary, complex five-step chemical transformation from 2-pyrone and oxalacetate to benzoate involving decarboxylation, C-C bond formation, and dehydration. The catalytic mechanism of the whole pathway was investigated in three separate chemical steps. In the first decarboxylation step, the enzyme loses oxalacetate decarboxylation activity upon incubation with EDTA. Activity is fully restored by addition of Mg(II) and is not restored with other divalent metal cations. The dissociation constant of 0.93 ؋ 10 ؊7 for Mg(II) and atomic absorption analysis established a 1:1 stoichiometric complex. Inhibition of pyruvate formation with 2-pyrone revealed that the actual product in the first step is a pyruvate enolate, which undergoes C-C bond formation in the presence of 2-pyrone. Incubation of substrate analogs provided aberrant adducts that were produced via C-C bond formation and rearrangement. This strongly indicates that the second step is two C-C bond formations, affording a bicyclic intermediate. Based on the stereospecificity, involvement of a Diels-Alder reaction at the second step is proposed. Incubation of the stereospecifically deuterium-labeled malate with 2-pyrones in the presence of malate dehydrogenase provided information for the stereochemical course of the reaction catalyzed by macrophomate synthase, indicating that the first decarboxylation provides pyruvate (Z)-[3-2 H]enolate and that dehydration at the final step occurs with anti-elimination accompanied by concomitant decarboxylation. Examination of kinetic parameters in the individual steps suggests that the third step is the rate-determining step of the overall transformation.