We have obtained the structure of the bacterial diterpene synthase, tuberculosinol/iso-tuberculosinol synthase (Rv3378c) from Mycobacterium tuberculosis, a target for anti-infective therapies that block virulence factor formation. This phosphatase adopts the same fold as found in the Z- or cis-prenyltransferases. We also obtained structures containing the tuberculosinyl diphosphate substrate together with one bisphosphonate inhibitor-bound structure. These structures together with the results of site-directed mutagenesis suggest an unusual mechanism of action involving two Tyr residues. Given the similarity in local and global structure between Rv3378c and the M. tuberculosis cis-decaprenyl diphosphate synthase (DPPS; Rv2361c), the possibility exists for the development of inhibitors that target not only virulence but also cell wall biosynthesis, based in part on the structures reported here.