The diterpene cyclase taxadiene synthase from yew (Taxus) species transforms geranylgeranyl diphosphate to taxa-4(5),11(12)-diene as the first committed step in the biosynthesis of the anti-cancer drug Taxol. Taxadiene synthase is translated as a preprotein bearing an N-terminal targeting sequence for localization to and processing in the plastids. Overexpression of the full-length preprotein in Escherichia coli and purification are compromised by host codon usage, inclusion body formation, and association with host chaperones, and the preprotein is catalytically impaired. Since the transit peptide-mature enzyme cleavage site could not be determined directly, a series of N-terminally truncated enzymes was created by expression of the corresponding cDNAs from a suitable vector, and each was purified and kinetically evaluated. Deletion of up to 79 residues yielded functional protein; however, deletion of 93 or more amino acids resulted in complete elimination of activity, implying a structural or catalytic role for the amino terminus. The pseudomature form of taxadiene synthase having 60 amino acids deleted from the preprotein was found to be superior with respect to level of expression, ease of purification, solubility, stability, and catalytic activity with kinetics comparable to the native enzyme. In addition to the major product, taxa-4(5),11(12)-diene (94%), this enzyme produces a small amount of the isomeric taxa-4(20),11(12)-diene (∼5%), and a product tentatively identified as verticillene (∼1%). Isotopically sensitive branching experiments utilizing (4R)-[4-2H1]geranylgeranyl diphosphate confirmed that the two taxadiene isomers, and a third (taxa-3(4),11(12)-diene), are derived from the same intermediate taxenyl C4-carbocation. These results, along with the failure of the enzyme to utilize 2,7-cyclogeranylgeranyl diphosphate as an alternate substrate, indicate that the reaction proceeds by initial ionization of the diphosphate ester and macrocyclization to the verticillyl intermediate, followed by a secondary cyclization to the taxenyl cation and deprotonation (i.e., formation of the A-ring prior to B/C-ring closure). Two potential mechanism-based inhibitors were tested with recombinant taxadiene synthase but neither provided time-dependent inactivation nor afforded more than modest competitive inhibition.