Antifungal HSAF (heat‐stable antifungal factor, dihydromaltophilin) is a polycyclic tetramate macrolactam from the biocontrol agent Lysobacter enzymogenes. Its biosynthetic gene cluster contains only a single‐module polyketide synthase–nonribosomal peptide synthetase (PKS‐NRPS), although two separate hexaketide chains are required to assemble the skeleton. To address the unusual biosynthetic mechanism, we expressed the biosynthetic genes in two “clean” strains of Streptomyces and showed the production of HSAF analogues and a polyene tetramate intermediate. We then expressed the PKS module in Escherichia coli and purified the enzyme. Upon incubation of the enzyme with acyl‐coenzyme A and reduced nicotinamide adenine dinucleotide phosphate (NADPH), a polyene was detected in the tryptic acyl carrier protein (ACP). Finally, we incubated the polyene–PKS with the NRPS module in the presence of ornithine and adenosine triphosphate (ATP), and we detected the same polyene tetramate as that in Streptomyces transformed with the PKS‐NRPS alone. Together, our results provide evidence for an unusual iterative biosynthetic mechanism for bacterial polyketide–peptide natural products.