Nitrogen-heteroatom bonds figure prominently in the structural, chemical, and functional diversity of natural products. In the case of Pseudomonas siderophore pseudomonine, an N-O hydroxamate linkage is found uncommonly configured in an isoxazolidinone ring. In an effort to understand the biogenesis of this heterocycle, we have characterized the pseudomonine synthetase in vitro and reconstituted the complete biosynthetic pathway. Our results indicate that the isoxazolidinone of pseudomonine arises from spontaneous rearrangement of an oxazoline precursor. To the best of our knowledge, this is a previously uncharacterized mode of post-assembly line heterocyclization. Our results establish the oxygen of the ubiquitous siderophore hydroxamate functionality as a nucleophile and may be indicative of general strategy for N-O-C bond formation in nature.