Prenylated indole alkaloids featuring spirooxindole rings possess a 3R or 3S carbon stereocenter, which determines the bioactivities of these compounds. Despite the stereoselective advantages of spirooxindole biosynthesis compared with those of organic synthesis, the biocatalytic mechanism for controlling the 3R or 3S-spirooxindole formation has been elusive. Here, we report an oxygenase/semipinacolase CtdE that specifies the 3S-spirooxindole construction in the biosynthesis of 21R-citrinadin A. High-resolution X-ray crystal structures of CtdE with the substrate and cofactor, together with site-directed mutagenesis and computational studies, illustrate the catalytic mechanisms for the possible β-face epoxidation followed by a regioselective collapse of the epoxide intermediate, which triggers semipinacol rearrangement to form the 3S-spirooxindole. Comparing CtdE with PhqK, which catalyzes the formation of the 3R-spirooxindole, we reveal an evolutionary branch of CtdE in specific 3S spirocyclization. Our study provides deeper insights into the stereoselective catalytic machinery, which is important for the biocatalysis design to synthesize spirooxindole pharmaceuticals.