We describe a core gene cluster, comprised of eight genes (designated CTB1–8), and associated with cercosporin toxin production in Cercospora nicotianae. Sequence analysis identified 10 putative open reading frames (ORFs) flanking the previously characterized CTB1 and CTB3 genes that encode, respectively, the polyketide synthase and a dual methyltransferase/monooxygenase required for cercosporin production. Expression of eight of the genes was co-ordinately induced under cercosporin-producing conditions and was regulated by the Zn(II)Cys6 transcriptional activator, CTB8. Expression of the genes, affected by nitrogen and carbon sources and pH, was also controlled by another transcription activator, CRG1, previously shown to regulate cercosporin production and resistance. Disruption of the CTB2 gene encoding a methyltransferase or the CTB8 gene yielded mutants that were completely defective in cercosporin production and inhibitory expression of the other CTB cluster genes. Similar ‘feedback’ transcriptional inhibition was observed when the CTB1, or CTB3 but not CTB4 gene was inactivated. Expression of four ORFs located on the two distal ends of the cluster did not correlate with cercosporin biosynthesis and did not show regulation by CTB8, suggesting that the biosynthetic cluster was limited to CTB1–8. A biosynthetic pathway and a regulatory network leading to cercosporin formation are proposed.