Oxetanocin A (OXT-A) is a potent antitumour, antiviral and antibacterial compound. Biosynthesis of OXT-A has been linked to a plasmid-borneBacillus megateriumgene cluster that contains four genes:oxsA,oxsB,oxrAandoxrB. Here we show that both theoxsAandoxsBgenes are required for the production of OXT-A. Biochemical analysis of the encoded proteins, a cobalamin (Cbl)-dependentS-adenosylmethionine (AdoMet) radical enzyme, OxsB, and an HD-domain phosphohydrolase, OxsA, reveals that OXT-A is derived from a 2′-deoxyadenosine phosphate in an OxsB-catalysed ring contraction reaction initiated by hydrogen atom abstraction from C2′. Hence, OxsB represents the first biochemically characterized non-methylating Cbl-dependent AdoMet radical enzyme. X-ray analysis of OxsB reveals the fold of a Cbl-dependent AdoMet radical enzyme, a family of enzymes with an estimated 7,000 members. Overall, this work provides a framework for understanding the interplay of AdoMet and Cbl cofactors and expands the catalytic repertoire of Cbl-dependent AdoMet radical enzymes.