Stilbenoids, a class of compounds with the stilbene skeleton as part of plant secondary metabolism, are renowned for their diverse health benefits. Among them, 2,3,5,4'-Tetrahydroxystilbene-2-O-beta-D-glucoside (THSG), specifically abundant in the famous medicinal plant Pleuropterus multiflorus, exhibits significant pharmacological properties. A selfing progeny of P. multiflorus commercial variety Jinwufugui No.1, which contains high THSG content, was used for genome sequencing. Through the combination of weighted correlation network analysis, genome mining, and enzymatic characterization studies, we identified an unpredicted biosynthetic gene cluster responsible for THSG biosynthesis. This cluster includes a stilbene synthase (PmSTS1), a flavin-containing monooxygenase (PmFMO3), and a UDP-glycosyltransferase (UGT72B90). Our findings suggest this stilbenoid gene cluster is formed by transposable element-mediated gene duplications and neofunctionalization, and regulated by MYB and NAC type transcription factors. Notably, PmFMO3, as the first identified stilbenoid-2-hydroxylase, was confirmed that it can modify the other stilbenoids without the A ring modifications. The novel type of gene cluster, in which FMO serves as the key decorating enzyme, will guide the identification of more biosynthetic gene clusters in plants. In addition, the characterization of PmFMO3 extends our understanding of the FMO gene function in plants, and provides an important catalytic bioparts for the heterologous synthesis of polyhydroxylated stilbenoids.