Recent reports have provided the first insights into the mechanisms of the extensive post-translational modifications involved in the biosynthesis of the lantibiotics, a class of peptide antimicrobial agents. These modifications involve dehydration of several serine and threonine residues followed by intramolecular conjugate additions of cysteines, resulting in extensively cross-linked polycyclic structures. Both in vivo and in vitro studies indicate low substrate specificity of the modification machinery, which has been explored for re-engineering of the structures of a number of members. In addition to these developments in understanding their biosynthesis, studies on the mode of action of several lantibiotics have shown a unique mechanism of binding to lipid II, an intermediate in cell wall biosynthesis.