Xanthomonas albilineans, which causes leaf scald disease of sugarcane, produces a highly potent pathotoxin called albicidin. We report here sequencing and homology analysis of the major gene cluster, XALB1 (55,839 bp), and a second, smaller region, XALB2 (2,986 bp), involved in albicidin biosynthesis. XALB1 contains 20 open reading frames, including i) three large genes with a modular architecture characteristic of polyketide synthases (PKSs) and nonribosomal peptide synthases (NRPSs) and ii) several putative modifying, regulatory, and resistance genes. Sequencing and complementation studies of six albicidin-defective mutants enabled us to confirm the involvement of the three PKS and NRPS genes encoded by XALB1 in albicidin production. XALB2 contains only one gene that is required for post-translational activation of PKS and NRPS enzymes, confirming the involvement of these enzymes in albicidin biosynthesis. In silico analysis of these three PKS or NRPS enzymes allowed us to propose a model for the albicidin backbone assembly and to gain insight into the structural features of this pathotoxin. This is the first description of a complete mixed PKS-NRPS gene cluster for toxin production in the genus Xanthomonas.