Mellein and the related 3,4-dihydroisocoumarins are a family of natural products with interesting biological properties. The mechanisms of dihydroisocoumarin biosynthesis remain largely speculative today. Here we report the synthesis of mellein by a partially reducing iterative polyketide synthase (PR-PKS) as a pentaketide product. Remarkably, despite the head-to-tail homology shared with several fungal and bacterial PR-PKSs, the mellein synthase exhibits a distinct keto reduction pattern in the synthesis of the pentaketide. We present evidence to show that the ketoreductase (KR) domain alone is able to recognize and differentiate the polyketide intermediates, which provides a mechanistic explanation for the programmed keto reduction in these PR-PKSs.