Labdane-related diterpenoids (LRDs) in fungi are a pharmaceutically important, but underexplored family of natural products. In the biosynthesis of fungal LRDs, bifunctional terpene cyclases (TCs) consisting of αβγ domains are generally used to synthesize the polycyclic skeletones of LRDs. Herein, we conducted genome mining of LRDs in our fungal genome database and identified a unique pair of TCs, AsPS and AsCPS, in the fungus Arthrinium sacchari. AsPS consists of catalytically active α and inactive β domains, whereas AsCPS contains βγ domains and a truncated α domain. Heterologous expression in Aspergillus oryzae and biochemical characterization of recombinant proteins demonstrated that AsCPS synthesized copalyl diphosphate and that AsPS then converted it to (−)-sandaracopimaradiene. Since AsPS and AsCPS have distinct domain organizations from those of known fungal TCs and are likely generated through fusion or loss of catalytic domains, our findings provide insight into the evolution of TCs in fungi.