A cDNA encoding a novel plant type III polyketide synthase was cloned and sequenced from the Chinese club moss Huperzia serrata (Huperziaceae). The deduced amino acid sequence of Hu. serrata polyketide synthase 1 showed 44–66% identity to those of other chalcone synthase superfamily enzymes of plant origin. Further, phylogenetic tree analysis revealed that Hu. serrata polyketide synthase 1 groups with other nonchalcone-producing type III polyketide synthases. Indeed, a recombinant enzyme expressed in Escherichia coli showed unusually versatile catalytic potential to produce various aromatic tetraketides, including chalcones, benzophenones, phloroglucinols, and acridones. In particular, it is remarkable that the enzyme accepted bulky starter substrates such as 4-methoxycinnamoyl-CoA and N-methylanthraniloyl-CoA, and carried out three condensations with malonyl-CoA to produce 4-methoxy-2′,4′,6′-trihydroxychalcone and 1,3-dihydroxy-N-methylacridone, respectively. In contrast, regular chalcone synthase does not accept these bulky substrates, suggesting that the enzyme has a larger starter substrate-binding pocket at the active site. Although acridone alkaloids have not been isolated from Hu. serrata, this is the first demonstration of the enzymatic production of acridone by a type III polyketide synthase from a non-Rutaceae plant. Interestingly, Hu. serrata polyketide synthase 1 lacks most of the consensus active site sequences with acridone synthase from Ruta graveolens (Rutaceae).