We studied the mechanisms of activation and stereoselectivity of a monofunctional Diels-Alderase (PyrI4)-catalyzed intramolecular Diels-Alder reaction that leads to formation of the key spiro-tetramate moiety in the biosynthesis of the pyrroindomycin family of natural products. Key activation effects of PyrI4 include acid catalysis and an induced-fit mechanism that cooperate with the unique "lid" feature of PyrI4 to stabilize the Diels-Alder transition state. PyrI4 enhances the intrinsic Diels-Alder stereoselectivity of the substrate and leads to stereospecific formation of the product.