Avermectins (AVEs), which are widely used for the treatment of agricultural parasitic diseases, belong to a family of 6,6-spiroketal moiety-containing, macrolide natural products. AVE biosynthesis is known to employ a type I polyketide synthase (PKS) system to assemble the molecular skeleton for further functionalization. It remains unknown how and when spiroketal formation proceeds, particularly regarding the role of AveC, a unique protein in the pathway that shares no sequence homology to any enzyme of known function. Here, we report the unprecedented, dual function of AveC by correlating its activity with spiroketal formation and modification during the AVE biosynthetic process. The findings in this study were supported by characterizing extremely unstable intermediates, products and their spontaneous derivative products from the simplified chemical profile and by comparative analysis of in vitro biotransformations and in vivo complementations mediated by AveC and MeiC (the counterpart in biosynthesizing the naturally occurring, AVE-like meilingmycins). AveC catalyzes the stereospecific spiroketalization of a dihydroxy-ketone polyketide intermediate and the optional dehydration to determine the regiospecific saturation characteristics of spiroketal diversity. These reactions take place between the closures of the hexene ring and 16-membered macrolide and the formation of the hexahydrobenzofuran unit. MeiC can replace the spirocyclase activity of AveC, but it lacks the independent dehydratase activity. Elucidation of the generality and specificity of AveC-type proteins allows for the rationalization of previously published results that were not completely understood, suggesting that enzyme-mediated spiroketal formation was initially underestimated, but is, in fact, widespread in nature for the control of stereoselectivity.