FD‐891 is a 16‐membered cytotoxic antibiotic macrolide that is especially active against human leukemia such as HL‐60 and Jurkat cells. We identified the FD‐891 biosynthetic (gfs) gene cluster from the producer Streptomyces graminofaciens A‐8890 by using typical modular type I polyketide synthase (PKS) genes as probes. The gfs gene cluster contained five typical modular type I PKS genes (gfsA, B, C, D, and E), a cytochrome P450 gene (gfsF), a methyltransferase gene (gfsG), and a regulator gene (gfsR). The gene organization of PKSs agreed well with the basic polyketide skeleton of FD‐891 including the oxidation states and α‐alkyl substituent determined by the substrate specificities of the acyltransferase (AT) domains. To clarify the involvement of the gfs genes in the FD‐891 biosynthesis, the P450 gfsF gene was inactivated; this resulted in the loss of FD‐891 production. Instead, the gfsF gene‐disrupted mutant accumulated a novel FD‐891 analogue 25‐O‐methyl‐FD‐892, which lacked the epoxide and the hydroxyl group of FD‐891. Furthermore, the recombinant GfsF enzyme coexpressed with putidaredoxin and putidaredoxin reductase converted 25‐O‐methyl‐FD‐892 into FD‐891. In the course of the GfsF reaction, 10‐deoxy‐FD‐891 was isolated as an enzymatic reaction intermediate, which was also converted into FD‐891 by GfsF. Therefore, it was clearly found that the cytochrome P450 GfsF catalyzes epoxidation and hydroxylation in a stepwise manner in the FD‐891 biosynthesis. These results clearly confirmed that the identified gfs genes are responsible for the biosynthesis of FD‐891 in S. graminofaciens.