Recently discovered biosynthetic gene clusters in plants are a striking example of the nonrandom complex structure of eukaryotic genomes. The mechanisms underpinning the formation of these clustered pathways are not understood. Here we carry out a systematic analysis of transposable elements associated with clustered terpene biosynthetic genes in plant genomes, and find evidence to suggest a role for miniature inverted-repeat transposable elements in cluster formation in eudicots. Our analyses provide insights into potential mechanisms of cluster assembly. They also shed light on the emergence of a “block” mechanism for the foundation of new terpene clusters in the eudicots in which microsyntenic blocks of terpene synthase and cytochrome P450 gene pairs duplicate, providing templates for the evolution of new pathways.Plants produce a plethora of natural products, including many drugs. It has recently emerged that the genes encoding different natural product pathways may be organized as biosynthetic gene clusters in plant genomes, with >30 examples reported so far. Despite superficial similarities with microbes, these clusters have not arisen by horizontal gene transfer, but rather by gene duplication, neofunctionalization, and relocation via unknown mechanisms. Previously we reported that two Arabidopsis thaliana biosynthetic gene clusters are located in regions of the genome that are significantly enriched in transposable elements (TEs). Other plant biosynthetic gene clusters also harbor abundant TEs. TEs can mediate genomic rearrangement by providing homologous sequences that enable illegitimate recombination and gene relocation. Thus, TE-mediated recombination may contribute to plant biosynthetic gene cluster formation. TEs may also facilitate establishment of regulons. However, a systematic analysis of the TEs associated with plant biosynthetic gene clusters has not been carried out. Here we investigate the TEs associated with clustered terpene biosynthetic genes in multiple plant genomes and find evidence to suggest a role for miniature inverted-repeat transposable elements in cluster formation in eudicots. Through investigation of the newly sequenced Amborella trichopoda, Aquilegia coerulea, and Kalanchoe fedtschenkoi genomes, we further show that the “block” mechanism of founding of biosynthetic gene clusters through duplication and diversification of pairs of terpene synthase and cytochrome P450 genes that is prevalent in the eudicots arose around 90–130 million years ago, after the appearance of the basal eudicots and before the emergence of the superrosid clade.