An enzyme solution with the capacity to synthesize the diphenyl derivative alternariol has been prepared from Alternaria tenuis. The enzyme has been purified about 30-fold and malonyl coenzyme A and acetyl co-enzyme A found to be precursors. Malonyl coenzyme A could be substituted with malonyl pantetheine or S-malonyl N-caprylcysteamine. The formation of alternariol has been shown to proceed through poly-condensation of malonate with the participation of only one acetate unit.