YisP is involved in biofilm formation in Bacillus subtilis and has been predicted to produce C30 isoprenoids. We determined the structure of YisP and observed that it adopts the same fold as squalene and dehydrosqualene synthases. However, the first aspartate-rich motif found in essentially all isoprenoid synthases is aspartate poor in YisP and cannot catalyze head-to-head condensation reactions. We find that YisP acts as a phosphatase, catalyzing formation of farnesol from farnesyl diphosphate, and that it is the first phosphatase to adopt the fold seen in the head-to-head prenyl synthases. Farnesol restores biofilm formation in a Δyisp mutant and modifies lipid membrane structure similarly to the virulence factor staphyloxanthin. This work clarifies the role of YisP in biofilm formation and suggests an intriguing possibility that many of the YisP-like homologs found in other bacteria may also have interesting products and functions.