Mycophenolic acid (MPA) from filamentous fungi is the first natural product antibiotic to be isolated and crystallized, and a first-line immunosuppressive drug for organ transplantations and autoimmune diseases. However, some key biosynthetic mechanisms of such an old and important molecule have remained unclear. Here, we elucidate the MPA biosynthetic pathway that features both compartmentalized enzymatic steps and unique cooperation between biosynthetic and beta-oxidation catabolism machineries based on targeted gene inactivation, feeding experiments in heterologous expression hosts, enzyme functional characterization and kinetic analysis, and microscopic observation of protein subcellular localization. Besides identification of the oxygenase MpaB' as the long-sought key enzyme responsible for the oxidative cleavage of the farnesyl side chain, we reveal the intriguing pattern of compartmentalization for the MPA biosynthetic enzymes, including the cytosolic polyketide synthase MpaC' and O-methyltransferase MpaG', the Golgi apparatus-associated prenyltransferase MpaA', the endoplasmic reticulum-bound oxygenase MpaB' and P450-hydrolase fusion enzyme MpaDE', and the peroxisomal acyl-coenzyme A (CoA) hydrolase MpaH'. The whole pathway is elegantly comediated by these compartmentalized enzymes, together with the peroxisomal beta-oxidation machinery. Beyond characterizing the remaining outstanding steps of the MPA biosynthetic steps, our study highlights the importance of considering subcellular contexts and the broader cellular metabolism in natural product biosynthesis.