A strategy for introducing structural diversity into polyketides by exploiting the promiscuity of an in-line methyltransferase domain in a multidomain polyketide synthase is reported. In vitro investigations using the highly-reducing fungal polyketide synthase CazF revealed that its methyltransferase domain accepts the nonnatural cofactor propargylic Se-adenosyl-l-methionine and can transfer the propargyl moiety onto its growing polyketide chain. This propargylated polyketide product can then be further chain-extended and cyclized to form propargyl-α pyrone or be processed fully into the alkyne-containing 4'-propargyl-chaetoviridin A.