In polyketide biosynthesis, ring formation is one of the key diversification steps. Olivetolic acid cyclase (OAC) from Cannabis sativa, involved in cannabinoid biosynthesis, is the only known plant polyketide cyclase. In addition, it is the only functionally characterized plant a+b barrel (DABB) protein that catalyzes the C2-C7 aldol cyclization of the linear pentyl tetra-b-ketide CoA as the substrate, to generate olivetolic acid (OA). Herein, we solved the OAC apo and OAC-OA complex binary crystal structures at 1.32 and 1.70A resolutions, respectively. The crystal structures revealed that the enzyme indeed belongs to the DABB superfamily, as previously proposed, and possesses a unique active-site cavity containing the pentyl-binding hydrophobic pocket and the polyketide binding site, which have never been observed among the functionally and structurally characterized bacterial polyketide cyclases. Furthermore, site-directed mutagenesis studies indicated that Tyr72 and His78 function as acid/base catalysts at the catalytic center. Structural and/or functional studies of OAC suggested that the enzyme lacks thioesterase and aromatase activities. These observations demonstrated that OAC employs unique catalytic machinery utilizing acid/base catalytic chemistry for the formation of the precursor of OA. The structural and functional insights obtained in this work thus provide the foundation for analyses of the plant polyketide cyclases that will be discovered in the future.