Terpenoids can be found in almost all forms of life; however, the biosynthesis of bacterial terpenoids has not been intensively studied. This study reports the identification and functional characterization of the gene cluster CYP264B1-geoA from Sorangium cellulosum So ce56. Expression of the enzymes and synthesis of their products for NMR analysis and X-ray diffraction were carried out by employing an Escherichia coli whole-cell conversion system that provides the geoA substrate farnesyl pyrophosphate through simultaneous overexpression of the mevalonate pathway genes. The geoA product was identified as a novel sesquiterpene, and assigned NMR signals unambiguously proved that geoA is an (+)-eremophilene synthase. The very tight binding of (+)-eremophilene (∼0.40 μM), which is also available in S. cellulosum So ce56, and its oxidation by CYP264B1 suggest that the CYP264B1-geoA gene cluster is required for the biosynthesis of (+)-eremophilene derivatives.