Panax quinquefolius is one of perennial herbs and well known for its outstanding pharmacological activity. Ginsenosides are thought to be the main active ingredients in Panax quinquefolius and exist in many kinds of plant genus Panax (ginseng). Dammarenediol synthase, which is considered as a key enzyme in ginsenoside biosynthesis pathway can convert 2, 3-oxidosqualene into dammarenediol-II. However, the dammarenediol synthase gene in Panax quinquefolius has not been identified. Here, we cloned and identified a dammarenediol synthase gene from Panax quinquefolius (PqDS, GenBank accession No. KC316048) at the first time, and reverse transcription-PCR (RT-PCR) analysis also showed an obvious transcription increase of PqDS in the methyl jasmonate (MeJA)-induced hairy roots. Ectopic expression of PqDS in yeast resulted in the production of dammarenediol-II was confirmed by liquid chromatography-atmospheric pressure chemical ionization mass spectrometry (LC/APCIMS). Moreover, overexpression of PqDS in transgenic hairy roots could increase the transcription of gene PqDS and another P450 gene PqD12H (encoding protopanaxadiol synthase in Panax quinquefolius), the accumulation of ginsenosides also increased at the same time. In addition, both PqDS and PqD12H gene co-expressed in recombinant yeast result in the production of protopanaxadiol was detected by LC/APCIMS; this result also provides a new strategy for the abundant production of protopanaxadiol in vitro.