Abstract Background Celastrol is a promising anti-obesity agent that acts as a sensitizer of the protein hormone leptin. Despite its potent activity, a sustainable source of celastrol and celastrol derivatives for further pharmacological studies is lacking. Results To elucidate the celastrol biosynthetic pathway and reconstruct it in Saccharomyces cerevisiae, we mined a root-transcriptome of Tripterygium wilfordii and identified four oxidosqualene cyclases and 49 cytochrome P450s as candidates to be involved in the early steps of celastrol biosynthesis. Using functional screening of the candidate genes in Nicotiana benthamiana, TwOSC4 was characterized as a novel oxidosqualene cyclase that produces friedelin, the presumed triterpenoid backbone of celastrol. In addition, three P450s (CYP712K1, CYP712K2, and CYP712K3) that act downstream of TwOSC4 were found to effectively oxidize friedelin and form the likely celastrol biosynthesis intermediates 29-hydroxy-friedelin and polpunonic acid. To facilitate production of friedelin, the yeast strain AM254 was constructed by deleting UBC7, which afforded a fivefold increase in friedelin titer. This platform was further expanded with CYP712K1 to produce polpunonic acid and a method for the facile extraction of products from the yeast culture medium, resulting in polpunonic acid titers of 1.4 mg/L. Conclusion Our study elucidates the early steps of celastrol biosynthesis and paves the way for future biotechnological production of this pharmacologically promising compound in engineered yeast strains.