Coenzyme F420 is a microbial redox cofactor that mediates diverse physiological functions and is increasingly used for biocatalytic applications. Recently, diversified biosynthetic routes to F420 and the discovery of a derivative, 3PG-F420, were reported. 3PG-F420 is formed via activation of 3-phospho-d-glycerate (3-PG) by CofC, but the structural basis of substrate binding, its evolution, as well as the role of CofD in substrate selection remained elusive. Here, we present a crystal structure of the 3-PG-activating CofC from Mycetohabitans sp. B3 and define amino acids governing substrate specificity. Site-directed mutagenesis enabled bidirectional switching of specificity and thereby revealed the short evolutionary trajectory to 3PG-F420 formation. Furthermore, CofC stabilized its product, thus confirming the structure of the unstable molecule and revealing its binding mode. The CofD enzyme was shown to significantly contribute to the selection of related intermediates to control the specificity of the combined biosynthetic CofC/D step. These results imply the need to change the design of combined CofC/D activity assays. Taken together, this work presents novel mechanistic and structural insights into 3PG-F420 biosynthesis and evolution and opens perspectives for the discovery and enhanced biotechnological production of coenzyme F420 derivatives in the future. IMPORTANCE The microbial cofactor F420 is crucial for processes like methanogenesis, antibiotics biosynthesis, drug resistance, and biocatalysis. Recently, a novel derivative of F420 (3PG-F420) was discovered, enabling the production and use of F420 in heterologous hosts. By analyzing the crystal structure of a CofC homolog whose substrate choice leads to formation of 3PG-F420, we defined amino acid residues governing the special substrate selectivity. A diagnostic residue enabled reprogramming of the substrate specificity, thus mimicking the evolution of the novel cofactor derivative. Furthermore, a labile reaction product of CofC was revealed that has not been directly detected so far. CofD was shown to provide another layer of specificity of the combined CofC/D reaction, thus controlling the initial substrate choice of CofC. The latter finding resolves a current debate in the literature about the starting point of F420 biosynthesis in various organisms.