The biosynthesis of Pep5, a lanthionine-containing antimicrobial peptide, is directed by the 20-kbp plasmid pED503. We identified a 7.9-kbp DNA-fragment within this plasmid which covers the information for Pep5 synthesis in the homologous host Staphylococcus epidermidis 5 which has been cured of pED503. This fragment contained, in addition to the previously described structural gene pepA and the immunity gene pepI [Reis, M., Eschbach-Bludau, M., Iglesias-Wind, M. I., Kupke, T. & Sahl, H.-G. (1994) Appl. Env. Microbiol. 60, 2876-2883], a gene pepT coding for a translocator of the ABC transporter family, a gene pepP coding for a serine protease and two genes pepB and pepC coding for putative modification enzymes; the gene arrangement is pepTIAPBC. We analyzed the biosynthetic genes with respect to their function in Pep5 biosynthesis. Deletion of PepT reduced Pep5 production to about 10%, indicating that it can be partially replaced by other host-encoded translocators. Inactivation of PepP by site-directed mutagenesis of the active-site His residue resulted in production of incorrectly processed Pep5 fragments with strongly reduced antimicrobial activity. Deletion of pepB and pepC leads to accumulation of Pep5 prepeptide in the cells without excretion of processed peptide. A pepC-deletion clone did not excrete correctly matured Pep5 but it did produce fragments from which serine and threonine were absent. Only one of these fragments contained a single lanthionine residue out of three expected while the remaining, unmodified cysteine residues could be detected by reaction with Ellman's reagent. These results demonstrate that PepC is a thioether-forming protein and strongly suggest that PepB is responsible for dehydration of serine and threonine.