In the past few years, there has been impressive progress in elucidating the mechanism of biosynthesis of various natural products accomplished through the use of genetic, molecular biological and biochemical techniques. Here, we present a comprehensive overview of the current results from our studies on fungal natural product biosynthetic enzymes, including nonribosomal peptide synthetase and polyketide synthase–nonribosomal peptide synthetase hybrid synthetase, as well as auxiliary enzymes, such as methyltransferases and oxygenases. Specifically, biosynthesis of the following compounds is described in detail: (i) Sch210972, potentially involving a Diels–Alder reaction that may be catalyzed by CghA, a functionally unknown protein identified by targeted gene disruption in the wild type fungus; (ii) chaetoglobosin A, formed via multi-step oxidations catalyzed by three redox enzymes, one flavin-containing monooxygenase and two cytochrome P450 oxygenases as characterized by in vivo biotransformation of relevant intermediates in our engineered Saccharomyces cerevisiae; (iii) (−)-ditryptophenaline, formed by a cytochrome P450, revealing the dimerization mechanism for the biosynthesis of diketopiperazine alkaloids; (iv) pseurotins, whose variations in the C- and O-methylations and the degree of oxidation are introduced combinatorially by multiple redox enzymes; and (v) spirotryprostatins, whose spiro-carbon moiety is formed by a flavin-containing monooxygenase or a cytochrome P450 as determined by heterologous de novo production of the biosynthetic intermediates and final products in Aspergillus niger. We close our discussion by summarizing some of the key techniques that have facilitated the discovery of new natural products, production of their analogs and identification of biosynthetic mechanisms in our study.