The glycopeptide antibiotic vancomycin has been widely used to treat infections of Gram-positive bacteria including Clostridium difficile and methicillin-resistant Staphylococcus aureus. However, since its introduction, high level vancomycin resistance has emerged. The genes responsible require the action of the two-component regulatory system VanSR to induce expression of resistance genes. The mechanism of detection of vancomycin by this two-component system has yet to be elucidated. Diverging evidence in the literature supports activation models in which the VanS protein binds either vancomycin, or Lipid II, to induce resistance. Here we investigated the interaction between vancomycin and VanS from Streptomyces coelicolor (VanSSC), a model Actinomycete. We demonstrate a direct interaction between vancomycin and purified VanSSC, and traced these interactions to the extracellular region of the protein, which we reveal adopts a predominantly α-helical conformation. The VanSSC-binding epitope within vancomycin was mapped to the N-terminus of the peptide chain, distinct from the binding site for Lipid II. In targeting a separate site on vancomycin, the effective VanS ligand concentration includes both free and lipid-bound molecules, facilitating VanS activation. This is the first molecular description of the VanS binding site within vancomycin, and could direct engineering of future therapeutics.