Vibralactone is isolated from the basidiomycete fungus Boreostereum vibrans as one of the strongest lipase inhibitors. Its unusual beta-lactone-fused bicycle is derived from an aryl ring moiety via an oxidative ring-expansion prior to an intramolecular cyclization. Here, we report the discovery of the cyclase VibC which belongs to the alpha/beta-hydrolase superfamily and is involved in the vibralactone biosynthesis. Biochemical and crystal studies suggest that VibC may catalyze an aldol or an electrocyclic reaction initiated by the catalytic Ser-His-Asp triad. For the aldol and pericyclic chemistry in living cells, VibC is a unique hydrolase performing the carbocycle formation of an oxepinone to a fused bicyclic b-lactone. This presents a naturally occurring new enzyme reaction in both aldol and hydrolase (bio)chemistry that will guide future exploitation of these enzymes in synthetic biology for chemical diversity expansion of natural products.