In type II polyketide synthases (PKSs), which typically biosynthesize several antibiotic and antitumor compounds, the substrate is a growing polyketide chain, shuttled between individual PKS enzymes whilst covalently tethered to an acyl carrier protein (ACP): this requires the ACP interacting with a series of different enzymes in succession. During biosynthesis of the antibiotic actinorhodin, produced by Streptomyces cœlicolor, one such key binding event is between an ACP carrying a 16-carbon octaketide chain (actACP) and a ketoreductase (actKR). Once the octaketide is bound inside actKR, it is likely cyclized between C7 and C12 and regioselective reduction of the ketone at C9 occurs: how these elegant chemical and conformational changes are controlled is not yet known. Here, we perform protein-protein docking, protein NMR, and extensive molecular dynamics simulations to reveal a likely mode of association between actACP and actKR; we obtain and analyze a detailed model of the C7-C12-cyclized octaketide within actKR’s active site; and confirm this model through multiscale (QM/MM) reaction simulations of the key ketoreduction step. Molecular dynamics simulations show that the most thermodynamically stable cyclized octaketide isomer (7S,12R) also gives rise to the most ‘reactive conformations’ for ketoreduction. Subsequent reaction simulations show that ketoreduction is stereoselective as well as regioselective, resulting in an S-alcohol. Our simulations further indicate several conserved residues that may be involved in selectivity of C7-12 cyclisation and C9 ketoreduction. The detailed insights obtained on ACP-based substrate presentation in type II PKSs will help with the design of nonendogenous ACP-ketoreductase systems capable of biosynthesizing non-natural polyketides.