Modular trans-acyltransferase polyketide synthases (trans-AT PKSs) are enzymatic assembly lines that biosynthesize complex polyketide natural products. Relative to their better studied cis-AT counterparts, the trans-AT PKSs introduce remarkable chemical diversity into their polyketide products. A notable example is the lobatamide A PKS, which incorporates a methylated oxime. Here we demonstrate biochemically that this functionality is installed on-line by an unusual oxygenase-containing bimodule. Furthermore, analysis of the oxygenase crystal structure coupled with site-directed mutagenesis allows us to propose a model for catalysis, as well as identifying key protein-protein interactions that support this chemistry. Overall, our work adds oxime-forming machinery to the biomolecular toolbox available for trans-AT PKS engineering, opening the way to introducing such masked aldehyde functionalities into diverse polyketides.