Chicory (Cichorium intybus) is known to contain guaianolides, eudesmanolides, and germacranolides. These sesquiterpene lactones are postulated to originate from a common germacranolide, namely ( )-costunolide. Whereas a pathway for the formation of germacra-1(10),4,11(13)-trien-12-oic acid from farnesyl diphosphate had previously been established, we now report the isolation of an enzyme activity from chicory roots that converts the germacrene acid into ( )-costunolide. This ( )-costunolide synthase catalyzes the last step in the formation of the lactone ring present in sesquiterpene lactones and is dependent on NADPH and molecular oxygen. Incubation of the germacrene acid in the presence of 18O2 resulted in the incorporation of one atom of 18O into ( )-costunolide. The label was situated at the ring oxygen atom. Hence, formation of the lactone ring most likely occurs via C6-hydroxylation of the germacrene acid and subsequent attack of this hydroxyl group at the C12-atom of the carboxyl group. Blue light-reversible CO inhibition and experiments with cytochrome P450 inhibitors demonstrated that the ( )-costunolide synthase is a cytochrome P450 enzyme. In addition, enzymatic conversion of ( )-costunolide into 11(S),13-dihydrocostunolide and leucodin, a guaianolide, was detected. The first-mentioned reaction involves an enoate reductase, whereas the formation of leucodin from ( )-costunolide probably involves more than one enzyme, including a cytochrome P450 enzyme.