The antifungal caspofungin is a semi-synthetic derivative of the lipohexapetide pneumocandin B0 produced by the fungus Glarea lozoyensis.A whole genome sequencing approach has identified the pneumocandin biosynthetic gene cluster which contains a nonribosomal peptide synthetase (NRPS, GLNRPS4), a polyketide synthase (PKS, GLPKS4), and at least nine other modifying enzymes.Disruption mutants of GLNRPS4 or GLPKS4 no longer produce pneumocandin and lose their antibiotic activity against Candida albicans.In additional to pneumocandins, the G.lozoyensis genome reveals a rich repertoire of natural product-encoding gene clusters which include 24 PKSs, 6 NRPSs, 5 PKS-NRPS hybrids, 2 dimethylallyltryptophan synthases, and 3 terpene synthases.Characterization of the gene cluster provides a blueprint for bioengineering novel pneumocandin derivatives with more desirable pharmacological properties such as oral availability.Whole genome estimation of secondary metabolite-encoding genes firom G.lozoyensis illustrates the huge potential for natural products drug discovery from the vast fungal kingdom.