Pterocarpan forms the basic structure of leguminous phytoalexins, and most of the isoflavonoid pathway genes encoding the enzymes responsible for its biosynthesis have been identified. However, the last step of pterocarpan biosynthesis is a ring closure reaction, and the enzyme that catalyzes this step, 2'-hydroxyisoflavanol 4,2'-dehydratase or pterocarpan synthase (PTS), remains as an unidentified 'missing link'. This last ring formation is assumed to be the key step in determining the stereochemistry of pterocarpans, which plays a role in their antimicrobial activity. In this study, a cDNA clone encoding PTS from Glycyrrhiza echinata (GePTS1) was identified through functional expression fractionation screening of a cDNA library, which requires no sequence information, and orthologs from soybean (GmPTS1) and Lotus japonicus (LjPTS1) were also identified. These proteins were heterologously expressed in Escherichia coli and biochemically characterized. Surprisingly, the proteins were found to include amino acid motifs characteristic of dirigent proteins, some of which control stereospecific phenoxy radical coupling in lignan biosynthesis. The stereospecificity of substrates and products was examined using four substrate stereoisomers with hydroxy and methoxy derivatives at C-4'. The results showed that the 4R configuration was essential for the PTS reaction, and (-)- and (+)-pterocarpans were produced depending on the stereochemistry at C-3. In suspension-cultured soybean cells, levels of the GmPTS1 transcript increased temporarily prior to the peak in phytoalexin accumulation, strongly supporting the possible involvement of PTS in pterocarpan biosynthesis.