Microbial fermentation can provide a sustainable and cost-effective alternative to traditional plant extraction to produce natural food colours. Betalains are a class of yellow to red water-soluble pigments. Even though over 80 betalain variants are known, betanin is the only betalain available as a food colourant on the market. Many variants are acylated, which can enhance their stability and change the hue, but very few acyltransferases responsible for the acylation are known. Therefore, we mined the transcriptomes of Celosia argentea var. cristata and Hylocereus polyrhizus for BAHD acyltransferases, enzymes likely involved in betalain acylation. In vivo screening of the enzymes in betanin-producing Saccharomyces cerevisiae revealed that the acyltransferase HpBAHD3 from H. polyrhizus malonylates betanin, forming phyllocactin (6'-O-malonyl-betanin). This is the first identification of a BAHD acyltransferase involved in betalain biosynthesis. Expression of HpBAHD3 in a Yarrowia lipolytica strain engineered for high betanin production led to near-complete conversion of betanin to phyllocactin. In fed-batch fermentation, the strain produced 1.95 ± 0.024 g/L phyllocactin in 60 h. This study expands the range of natural food colourants produced through microbial fermentation and contributes to elucidating the biosynthesis pathway of acylated betalains.