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While chemical steps involved in bioactive cembranoid biosynthesis have been examined, the corresponding enzymatic mechanisms leading to their formation remain elusive. In the tobacco plant, Nicotiana tabacum, a putative cembratriene-ol synthase (CBTS) initiates the catalytic cascade that lead to the biosynthesis of cembratriene-4,6-diols, which displays antibacterial- and anti-proliferative activities. We report here on structural homology models, functional studies, and mechanistic explorations of this enzyme using a combination of biosynthetic and computational methods. This approach guided us to develop an efficient de novo production of five bioactive non- and monohydroxylated cembranoids. Our homology models in combination with quantum and classical simulations suggested putative principles of the CBTS catalytic cycle, and provided a possible rationale for the formation of premature olefinic side products. Moreover, the functional reconstruction of a N. tabacum-derived class II P450 with a cognate CPR, obtained by transcriptome mining provided for production of bioactive cembratriene-4,6-diols. Our combined findings provide mechanistic insights into cembranoid biosynthesis, and a basis for the sustainable industrial production of highly valuable bioactive cembranoids.