Acyltransferase (AT) domains of polyketide synthases (PKSs) usually use coenzyme A (CoA) as an acyl donor to transfer common acyl units to acyl carrier protein (ACP) domains, initiating incorporation of acyl units into polyketides. Two clinical immunosuppressive agents, FK506 and FK520, are biosynthesized by the same PKSs in several Streptomyces strains. In this study, characterization of AT4FkbB (the AT domain of the fourth module of FK506 PKS) in transacylation reactions showed that AT4FkbB recognizes both an ACP domain (ACPTcsA) and CoA as acyl donors for transfer of a unique allylmalonyl (AM) unit to an acyl acceptor ACP domain (ACP4FkbB), resulting in FK506 production. In addition, AT4FkbB uses CoA as an acyl donor to transfer an unusual ethylmalonyl (EM) unit to ACP4FkbB, resulting in FK520 production, and transfers AM units to non-native ACP acceptors. Characterization of AT4FkbB in self-acylation reactions suggests that AT4FkbB controls acyl unit specificity in transacylation reactions but not in self-acylation reactions. Generally, AT domains of PKSs only recognize one acyl donor; however, we report here that AT4FkbB recognizes two acyl donors for the transfer of different acyl units. DATABASE: Nucleotide sequence data have been submitted to the GenBank database under accession numbers KJ000382 and KJ000383. : An acyltransferase (AT) of FK506 biosynthetic polyketide synthase (PKS), AT4FkbB recognizes an acyl carrier protein (ACP), ACPTcsA as an acyl donor to transfer allylmalonyl (AM) unit into an acyl acceptor ACP, ACP4FkbB, resulting in FK506 production. AT4FkbB also uses coenzyme A as an acyl donor to transfer ethylmalonyl (EM) unit into ACP4FkbB, resulting in FK520 production.(Figure is included in full-text article.)