Fungal highly reducing polyketide synthases (HRPKSs) biosynthesize polyketides using a single set of domains iteratively. Product release is a critical step in HRPKS function to ensure timely termination and enzyme turnover. Nearly all of the HRPKSs characterized to date employ a separate thioesterase (TE) or acyltransferase enzyme for product release. In this study, we characterized two fungal HRPKSs that have fused C-terminal TE domains, a new domain architecture for fungal HRPKSs. We showed that both HRPKS-TEs synthesize aminoacylated polyketides in an ATP-independent fashion. The KU42 TE domain selects cysteine and homocysteine and catalyzes transthioesterification using the side-chain thiol group as the nucleophile. In contrast, the KU43 TE domain selects leucine methyl ester and performs a direct amidation of the polyketide, a reaction typically catalyzed by nonribosomal peptide synthetase (NRPS) domains. The characterization of these HRPKS-TE enzymes showcases the functional diversity of HRPKS enzymes and provides potential TE domains as biocatalytic tools to diversify HRPKS structures.