Recent innovations in peptide natural product biosynthesis reveal a surprising wealth of previously uncharacterized biochemical reactions that have potential applications in synthetic biology. Among these, the cyanobactins are noteworthy because these peptides are protected at their N- and C-termini by macrocyclization. Here, we use a novel bifunctional enzyme AgeMTPT to protect linear peptides by attaching prenyl and methyl groups at their free N- and C-termini. Using this peptide protectase in combination with other modular biosynthetic enzymes, we describe the total synthesis of the natural product aeruginosamide B and the biosynthesis of linear cyanobactin natural products. Our studies help to define the enzymatic mechanism of macrocyclization, providing evidence against the water exclusion hypothesis of transpeptidation and favoring the kinetic lability hypothesis.