A novel PSL family prenyltransferase has relaxed substrate specificity, which can use a variety of cyclic dipeptides and prenyl donors as substrates to produce various terpenylated diketopiperazines. An amino acid sequence of the prenyltransferase is SEQ ID NO:1. An application of the prenyltransferase is transferring different prenyl groups to Trp-containing cyclic dipeptides. The prenyltransferase catalyzes the formation of terpenylated diketopiperazines by assembling prenyl groups onto cyclic di peptides, which provides a new strategy for drug development of diketopiperazines.