Teleocidin B is an indole terpenoid isolated from Streptomyces. Due to its unique chemical structure and ability to activate protein kinase C, it has attracted interest in the areas of organic chemistry and cell biology. Here, we report the identification of genes encoding enzymes for teleocidin B biosynthesis, including nonribosomal peptide synthetase (tleA), P-450 monooxygenase (tleB), prenyltransferase (tleC), and methyltransferase (tleD). The tleD gene, which is located outside of the tleABC cluster on the chromosome, was identified by transcriptional analysis and heterologous expression. Remarkably, TleD not only installs a methyl group on the geranyl moiety of the precursor but also facilitates the nucleophilic attack from the electron-rich indole to the resultant cation, to form the indole-fused six-membered ring. This is the first demonstration of a cation, generated from methylation, triggering successive terpenoid ring closure.