Violacein is a natural violet pigment produced by several Gram-negative bacteria, including Chromobacterium violaceum, Janthinobacterium lividum, and Pseudoalteromonas tunicata D2, among others. This pigment has potential medical applications as antibacterial, anti-trypanocidal, anti-ulcerogenic, and anticancer drugs. The structure of violacein consists of three units: a 5-hydroxyindole, an oxindole, and a 2-pyrrolidone. The biosynthetic origins of hydrogen, nitrogen, and carbon in the pyrrolidone nucleus were established by feeding experiments using various stable isotopically labeled tryptophans (Trps). Pro-S hydrogen of CH2 at the 3-position of Trp is retained during biosynthesis. The nitrogen atom is exclusively from the alpha-amino group, and the skeletal carbon atoms originate from the side chains of the two Trp molecules. All three oxygen atoms in the violacein core are derived from molecular oxygen. The most interesting biosynthetic mechanism is the 1,2-shift of the indole nucleus on the left side of the violacein scaffold. The alternative Trp molecule is directly incorporated into the right side of the violacein core. This indole shift has been observed only in violacein biosynthesis, despite the large number of natural products having been isolated. There were remarkable advances in biosynthetic studies in 2006-2008. During the 3 years, most of the intermediates and the complete pathway were established. Two independent processes are involved: the enzymatic process catalyzed by the five proteins VioABCDE or the alternative nonenzymatic oxidative decarboxylation reactions. The X-ray crystallographic structure of VioE that mediates the indole rearrangement reaction was recently identified, and the mechanism of the indole shift is discussed here.