Hispidin (1) is a polyphenolic compound with a wide range of pharmacological activities that is distributed in both plants and fungi. In addition to natural extraction, hispidin can be obtained by chemical or enzymatic synthesis. In this study, the identification and characterization of an undescribed enzyme, PheG, from Phellinus igniarius (P. igniarius), which catalyzes the construction of a key C─C bond in the enzymatic synthesis of hispidin are reported. It is demonstrated in vitro that PheG generates hispidin by catalyzing C─C bond formation in the aldol condensation reaction. Based on these results, a plausible pathway for hispidin biosynthesis is proposed by utilizing the primary triacetic acid lactone (TAL, 2) and 3,4-dihydroxybenzaldehyde (3). The mechanisms for the aldol condensation reaction of PheG are investigated using molecular dynamics (MD) simulations, molecular mechanics/generalized Born surface area (MM/GBSA) binding free energy calculations, density functional theory, and site-specific mutations. The locations of the key amino acid residues that catalyze the conversion of substrates 2 and 3 to hispidin at the active site of PheG-1 are identified. This study provides a new method for preparing hispidin with high efficiency and low cost.