Biosynthetic gene clusters are common in microbial organisms, but rare in plants, raising questions regarding the evolutionary forces that drive their assembly in multicellular eukaryotes. Here, we characterize the biochemical function of a rice (Oryza sativa) cytochrome P450 monooxygenase, CYP76M7, which seems to act in the production of antifungal phytocassanes and defines a second diterpenoid biosynthetic gene cluster in rice. This cluster is uniquely multifunctional, containing enzymatic genes involved in the production of two distinct sets of phytoalexins, the antifungal phytocassanes and antibacterial oryzalides/oryzadiones, with the corresponding genes being subject to distinct transcriptional regulation. The lack of uniform coregulation of the genes within this multifunctional cluster suggests that this was not a primary driving force in its assembly. However, the cluster is dedicated to specialized metabolism, as all genes in the cluster are involved in phytoalexin metabolism. We hypothesize that this dedication to specialized metabolism led to the assembly of the corresponding biosynthetic gene cluster. Consistent with this hypothesis, molecular phylogenetic comparison demonstrates that the two rice diterpenoid biosynthetic gene clusters have undergone independent elaboration to their present-day forms, indicating continued evolutionary pressure for coclustering of enzymatic genes encoding components of related biosynthetic pathways.