The ent-kaurenoids (e.g., oridonin and enmein) from the Isodon genus (Lamiaceae) are one class of diterpenoids with rich structural diversity and intriguing pharmaceutical activity. In contrast to the well-established gibberellin pathway, oxidative modifications diversifying the ent-kaurene skeleton in Isodon have remained undetermined for half a century. Here we report a chromosome-level genome assembly of I. rubescens, a well-recognized oridonin producer long favored by Asian people as a traditional herb with antitumor effects. The shoot apex was confirmed to be the actual region actively producing ent-kaurene diterpenoids. Through comparative genomics and phylogenetic analyses, we discovered a cluster of tandem-duplicated CYP706V oxygenase-encoding genes located on an ancient genomic block widely distributed in eudicots, whereas almost exclusively emerged in Isodon plants. In the shoot apex, IrCYP706V2 and IrCYP706V7 oxidized the ent-kaurene core in the initial stage of oridonin biosynthesis. Loss of CYP706Vs in other Lamiaceae plants offered an explanation for the specific kaurenoid production in Isodon plants. Moreover, we found that the Isodon genomes encode multiple diterpenoid synthases that are potentially involved in generating diterpenoid diversity. These findings provided new insights into the evolution of the lineage-specific diterpenoid pathway and laid a foundation for improving production of bioactive ent-kaurene-type diterpenoids by molecular breeding and synthetic biology approaches.