Fosfomycin is a broad-spectrum antibiotic that is useful against multi-drug resistant bacteria. Although its biosynthesis was first studied over 40 years ago, characterization of the penultimate methyl transfer reaction has eluded investigators. The enzyme believed to catalyze this reaction, Fom3, has been identified as a radical S-adenosyl-L-methionine (SAM) superfamily member. Radical SAM enzymes use SAM and a four-iron, four-sulfur ([4Fe-4S]) cluster to catalyze complex chemical transformations. Fom3 also belongs to a family of radical SAM enzymes that contain a putative cobalamin-binding motif, suggesting that it uses cobalamin for methylation. Here we describe the first biochemical characterization of Fom3 from Streptomyces wedmorensis. Since recombinant Fom3 is insoluble, we developed a successful refolding and iron-sulfur cluster reconstitution procedure. Spectroscopic analyses demonstrate that Fom3 binds a [4Fe-4S] cluster which undergoes a transition between a +2 "resting" state and a +1 active state characteristic of radical SAM enzymes. Site-directed mutagenesis of the cysteine residues in the radical SAM CxxxCxxC motif indicates that each residue is essential for functional cluster formation. We also provide preliminary evidence that Fom3 adds a methyl group to 2-hydroxyethylphosphonate (2-HEP) to form 2-hydroxypropylphosphonate (2-HPP) in an apparently SAM-, sodium dithionite-, and methylcobalamin-dependent manner.