The pikromycin (Pik)/methymycin biosynthetic pathway of Streptomyces venezuelae represents a valuable system for dissecting the fundamental mechanisms of modular polyketide biosynthesis, aminodeoxysugar assembly, glycosyltransfer, and hydroxylation leading to the production of a series of macrolide antibiotics, including the natural ketolides narbomycin and pikromycin. In this study, we describe four x-ray crystal structures and allied functional studies for PikC, the remarkable P450 monooxygenase responsible for production of a number of related macrolide products from the Pik pathway. The results provide important new insights into the structural basis for the C10/C12 and C12/C14 hydroxylation patterns for the 12-(YC-17) and 14-membered ring (narbomycin) macrolides, respectively. This includes two different ligand-free structures in an asymmetric unit (resolution 2.1 A) and two co-crystal structures with bound endogenous substrates YC-17 (resolution 2.35 A)or narbomycin (resolution 1.7 A). A central feature of the enzyme-substrate interaction involves anchoring of the desosamine residue in two alternative binding pockets based on a series of distinct amino acid residues that form a salt bridge and a hydrogen-bonding network with the deoxysugar C3' dimethylamino group. Functional significance of the salt bridge was corroborated by site-directed mutagenesis that revealed a key role for Glu-94 in YC-17 binding and Glu-85 for narbomycin binding. Taken together, the x-ray structure analysis, site-directed mutagenesis, and corresponding product distribution studies reveal that PikC substrate tolerance and product diversity result from a combination of alternative anchoring modes rather than an induced fit mechanism.