Geosmin is responsible for the characteristic odor of moist soil, as well as off-flavors in drinking water and foodstuffs. Geosmin is generated from farnesyl diphosphate (FPP, 2) by an enzyme that is encoded by the SCO6073 gene in the soil organism Streptomyces coelicolor A32 (ref. 3). We have now shown that the recombinant N-terminal half of this protein catalyzes the Mg2+-dependent cyclization of FPP to germacradienol and germacrene D, while the highly homologous C-terminal domain, previously thought to be catalytically silent, catalyzes the Mg2+-dependent conversion of germacradienol to geosmin. Site-directed mutagenesis confirmed that the N- and C-terminal domains each harbor a distinct, independently functioning active site. A mutation in the N-terminal domain of germacradienol-geosmin synthase of a catalytically essential serine to alanine results in the conversion of FPP to a mixture of sesquiterpenes that includes an aberrant product identified as isolepidozene, which was previously suggested to be an enzyme-bound intermediate in the cyclization of FPP to germacradienol.