Biosynthesis of dipeptide antibiotic bacilysin by a partially purified enzyme prepared from Bacillus subtilis PY79 was studied. Cell material was desintegrated by treatment with lysozyme and sonication and the extract was subjected to ammonium sulfate fractionation. Bacilysin-synthesizing enzyme activity was precipitated between 40% to 70% ammonium sulfate saturation. In vitro enzymatical synthesis of bacilysin was confirmed by performing thin layer chromatographic comparison of the antibiotic formed with the authentic bacilysin. An enzyme fraction (ca. 125 kDa) was prepared by fast flow gel permeation chromatography which was further purified by anion exchange FPLC. The enzymatic synthesis of bacilysin required either ATP or 2'-deoxy ATP and was entirely dependent on the presence of constituting amino acids. Although anticapsin, at the concentration used in enzyme assay, did not produce an inhibition zone when assayed against Staphylococcus aureus ATCC 9144, it exhibited a slight inhibition zone after incubation with the enzyme fraction in the absence of alanine under the standard assay conditions. To determine the mechanism of amino acid activation, ATP-PPi and ATP-P-i exchange reactions were performed with component amino acids L-alanine and L-anticapsin. The enzyme catalyzed ATP-PPi exchange reaction dependent on L-alanine, but did not activate L-anticapsin in this way. There was also no evidence for activation of this amino acid as an amino acid phosphate. Pantothenic acid was liberated from the enzyme fraction as determined microbiologically. Consistently, covalent binding as thioester was shown for L-alanine. These results indicated that the mechanism of bacilysin biosynthesis is not typical of the general multicarrier thiotemplate model.