SsLOS directly catalyzed formation of the sesquiterpenoid ether liguloxide in the medicinal plant Senecio scandens. Terpene synthases determine the diversity of terpene skeletons and corresponding terpenoid natural products. Oxygenated groups introduced in catalysis of terpene synthases are important for solubility, potential bioactivity and further elaboration of terpenoids. Here we identified one terpene synthase, SsLOS, in the Chinese medicinal plant Senecio scandens. SsLOS acted as the sesquiterpene synthase and utilized (E,E)-farnesyl diphosphate as the substrate to produce a blend of sesquiterpenoids. GC-MS analysis and NMR structure identification demonstrated that SsLOS directly produced the sesquiterpenoid ether, liguloxide, as well as its alcoholic isomer, 6-epi-guaia-2(3)-en-11-ol. Homology modeling and site-directed mutagenesis were combined to explore the catalytic mechanism of SsLOS. A few key residues were identified in the active site and hedycaryol was identified as the neutral intermediate of SsLOS catalysis. The plausible catalytic mechanism was proposed as well. Altogether, SsLOS was identified and characterized as the sesquiterpenoid ether synthase, which is the second terpenoid ether synthase after 1,8-cineol synthase, suggesting some insights for the universal mechanism of terpene synthases using the water molecule in the catalytic cavity.