Lantibiotics are biologically active peptides which contain the thioether amino acid lanthionine as well as several other modified amino acids. They can be broadly divided into two groups on the basis of their structures: type-A lantibiotics are elongated, amphiphilic peptides, while type-B lantibiotics are compact and globular. In the last decade there has been a marked increase in research interest in these peptides due both to the novel biosynthetic mechanisms by which they are produced, as well as to their potential applications. Lantibiotics are synthesised on the ribosome as a prepeptide which undergoes several post-translational modification events, including dehydration of specific hydroxyl amino acids to form dehydroamino acids, addition of neighbouring sulfhydryl groups to form thioethers and, in specific cases, other modifications such as introduction of D-alanine residues from L-serine, formation of lysinoalanine bridges, formation of novel N-terminal blocking groups and oxidative decarboxylation of a C-terminal cysteine. The genetic elements responsible for these specific modification reactions encode unique enzymes with hitherto unknown reaction mechanisms. Production of these peptides also requires accessory proteins including processing proteases, translocators of the ATP-binding cassette transporter family, regulatory proteins and dedicated producer self-protection mechanisms. While the principle biological activity of most type-B lantibiotics appears to be directed at the inhibition of enzyme functions, the type-A lantibiotics kill bacterial cells by forming pores in the cytoplasmic membrane.