Dhilirane-type meroterpenoids (DMs) featuring a 6/6/6/5/5 ring system represent a rare group of fungal meroterpenoids. To date, merely 11 DMs have been isolated or derived, leaving their chemical diversity predominantly unexplored. Herein, we leverage an understanding of biosynthesis to develop a workflow for discovery of DMs by genome mining, metabolite analysis, and tailoring enzyme catalysis. Twenty-three new DMs, including seven unprecedented scaffolds, were consequently identified. An α-ketoglutarate (α-KG)-dependent oxygenase DhiD was found to catalyze the stereodivergent ring contraction of dhilirolide D to form the dhilirane skeleton; while the cytochrome P450 DhiH reshaped the structural diversity by establishing diverse C−C bonds and oxidation. Crystallographic and mutagenesis experiments provide a molecular basis for the DhiD reaction and its stereodivergent products. Notably, DhiD exhibits substrate-controlled catalytic versatility in the chemical expansion of DMs through ring contraction, hydroxylation, dehydrogenation, epoxidation, isomerization, epimerization, and α-ketol cleavage. Bioassay results demonstrated that the obtained meroterpenoids exhibited anti-inflammatory and insecticidal activities. Our work provides insight into nature's arsenal for DM biosynthesis and the functional versatility of α-KG-dependent oxygenase and P450, which can be applied for target discovery and diversification of DM-type natural products.