Ingenol mebutate is a diterpene ester with a highly complex macrocyclic structure that has been approved for the treatment of actinic keratosis, a precondition of skin cancer. The current production of ingenol mebutate through plant extraction or chemical synthesis is inefficient and costly. Here, we describe the discovery of a biosynthetic route in Euphorbia lathyris L. (caper spurge) in which regio-specific oxidation of casbene is followed by an unconventional cyclization to yield jolkinol C, a probable key intermediate in the biosynthesis of macrocyclic diterpenes, including ingenol mebutate. These results can facilitate the biotechnological production of this high-value pharmaceutical and discovery of new biosynthetic intermediates with important bioactivities.