The eunicellane diterpenoids are a unique family of natural products seen in marine organisms, plants, and bacteria. We used a series of biochemical, bioinformatics, and theoretical experiments to investigate the mechanism of the first diterpene synthase known to form the eunicellane skeleton. Deuterium labeling studies and quantum chemical calculations support that Bnd4, from Streptomyces sp. (CL12‐4), forms the 6,10‐bicyclic skeleton through a 1,10‐cyclization, 1,3‐hydride shift, and 1,14‐cyclization cascade. Bnd4 also demonstrated sesquiterpene cyclase activity and the ability to prenylate small molecules. Bnd4 possesses a unique D94NxxxD motif and mutation experiments confirmed an absolute requirement for D94 as well as E169. [ABSTRACT FROM AUTHOR]