The structures and mechanism of action of many terpene cyclases are known, but no structures of diterpene cyclases have yet been reported. Here, we propose structural models based on bioinformatics, site-directed mutagenesis, domain swapping, enzyme inhibition, and spectroscopy that help explain the nature of diterpene cyclase structure, function, and evolution. Bacterial diterpene cyclases contain approximately 20 alpha-helices and the same conserved "QW" and DxDD motifs as in triterpene cyclases, indicating the presence of a betagamma barrel structure. Plant diterpene cyclases have a similar catalytic motif and betagamma-domain structure together with a third, alpha-domain, forming an alphabetagamma structure, and in H(+)-initiated cyclases, there is an EDxxD-like Mg(2+)/diphosphate binding motif located in the gamma-domain. The results support a new view of terpene cyclase structure and function and suggest evolution from ancient (betagamma) bacterial triterpene cyclases to (betagamma) bacterial and thence to (alphabetagamma) plant diterpene cyclases.