JBIR-34 and -35 produced by Streptomyces sp. Sp080513GE-23 are nonribosomal peptides that possess an unusual 4-methyloxazoline moiety. Through draft genome sequencing, cosmid cloning, and gene disruption, the JBIR-34 and -35 biosynthesis gene cluster (fmo cluster) was identified; it encodes 20 proteins including five nonribosomal peptide synthetases (NRPSs). Disruption of one of these NRPS genes (fmoA3) resulted in no JBIR-34 and -35 production and accumulation of 6-chloro-4-hydroxyindole-3-carboxylic acid. Stable isotope-feeding experiments indicated that the methyl group of the methyloxazoline ring is derived from alanine rather than methionine. A recombinant FmoH protein, a glycine/serine hydroxymethyltransferase homolog, catalyzed conversion of α-methyl-l-serine into d-alanine (the reverse reaction of α-methyl-l-serine synthesis catalyzed by FmoH in vivo). Taken together, we concluded that α-methyl-l-serine synthesized from d-alanine is incorporated into JBIR-34 and -35 to form the 4-methyloxazoline moiety. We also propose the biosynthesis pathway of JBIR-34 and -35.