Streptomyces sp. 139 generates a novel exopolysaccharide (EPS) designated as Ebosin, which exerts an antagonistic effect on IL-1R in vitro and anti-rheumatic arthritis activity in vivo. A ste gene cluster for Ebosin biosynthesis consisting of 27 ORFs was previously identified in our laboratory. In this paper, ste16 was expressed in Escherichia coli BL21 and the recombinant protein was purified, which has the ability to catalyze the transfer of the methyl group from S-adenosylmethionine (AdoMet) to dTDP-4-keto-6-deoxy-D-glucos, which was thus identified as a methyltransferase. In order to determine the function of ste16 in Ebosin biosynthesis, the gene was disrupted with a double crossover via homologous recombination. The monosaccharide composition of EPS-m generated by the mutant strain Streptomyces sp. 139 (ste16) was found to differ from that of Ebosin. The IL-1R antagonist activity of EPS-m was markedly lower than that of Ebosin. These experimental results have shown that the ste16 gene codes for a methyltransferase which is involved in Ebosin biosynthesis.