Albaflavenone, a tricyclic sesquiterpene antibiotic, is biosynthesized in Streptomyces coelicolor A3(2) by enzymes encoded in a two-gene operon. Initially, sesquiterpene cyclase catalyzes the cyclization of farnesyl diphosphate to the terpenoid epi-isozizaene, which is oxidized to the final albaflavenone by cytochrome P450 (CYP)170A1. Additionally, this CYP is a bifunctional enzyme, being able to also generate farnesene isomers from farnesyl diphosphate, owing to a terpene synthase active site moonlighting on the CYP molecule. To explore the functionality of this operon in other streptomycetes, we have examined culture extracts by GC/MS and established the presence of albaflavenone in five Streptomyces species. Bioinformatics examination of the predicted CYP170 primary amino acid sequences revealed substitutions in the CYP terpene synthase active site. To examine whether the terpene synthase site was catalytically active in another CYP170, we characterized the least related CYP170 orthologue from Streptomyces albus (CYP170B1). Following expression and purification, CYP170B1 showed a normal reduced CO difference spectrum at 450 nm, in contrast to the unusual 440-nm peak observed for S. coelicolor A3(2) CYP170A1. CYP170B1 can catalyze the conversion of epi-isozizaene to albaflavenone, but was unable to catalyze the conversion of farnesyl diphosphate to farnesene. Molecular modeling with our crystal structure of CYP170A1 suggests that the absence of key amino acids for binding the essential terpene synthase cofactor Mg(2+) may be the explanation for the loss of CYP170B1 bifunctionality.