A plethora of novel gene-encoded antimicrobial peptides from animals, plants and bacteria has been described during the last decade. Many of the bacterial peptides possess modified building blocks such as thioethers and thiazoles or unsaturated and stereoinverted amino acids, which are unique among ribosomally made peptides. Genetic and biochemical studies of many of these peptides, mostly the so-called lantibiotics, have revealed the degree to which cells are capable of transforming peptides by posttranslational modification. The biosynthesis follows a general scheme: Precursor peptides are first modified and then proteolytically activated; the latter may occur prior to, concomitantly with or after export from the cell. The genes for the biosynthetic machinery are organized in clusters and include information for the antibiotic prepeptide, the modification enzymes and accessory functions such as dedicated proteases and ABC transporters as well as immunity factors and regulatory proteins. These fundamental aspects are discussed along with the biotechnological potential of the peptides and of the biosynthesis enzymes, which could be used for construction of novel, peptide-based biomedical effector molecules.