An epoxycyclohexenone (ECH) moiety occurs in natural products of both bacteria and ascomycete and basidiomycete fungi. While the enzymes for ECH formation in bacteria and ascomycetes have been identified and characterized, it remained obscure how this structure is biosynthesized in basidiomycetes. In this study, we i) identified a genetic locus responsible for panepoxydone biosynthesis in the basidiomycete mushroom Panus rudis and ii) biochemically characterized PanH, the cytochrome P450 enzyme catalyzing epoxide formation in this pathway. Using a PanH-producing yeast as a biocatalyst, we synthesized a small library of bioactive ECH compounds as a proof of concept. Furthermore, homology modeling, molecular dynamics simulation, and site directed mutation revealed the substrate specificity of PanH. Remarkably, PanH is unrelated to ECH-forming enzymes in bacteria and ascomycetes, suggesting that mushrooms evolved this biosynthetic capacity convergently and independently of other organisms.