Daptomycin is a lipopeptide antibiotic produced by the soil bacterium Streptomyces roseosporus that is clinically used to treat severe infections with Gram-positive bacteria. In this review, we discuss the mode of action of this important antibiotic. Although daptomycin is structurally related to amphomycin and similar lipopeptides that inhibit peptidoglycan biosynthesis, experimental studies have not produced clear evidence that daptomycin shares their action mechanism. Instead, the best characterized effect of daptomycin is the permeabilization and depolarization of the bacterial cell membrane. This activity, which can account for daptomycin's bactericidal effect, correlates with the level of phosphatidylglycerol (PG) in the membrane. Accordingly, reduced synthesis of PG or its increased conversion to lysyl-PG promotes bacterial resistance to daptomycin. While other resistance mechanisms suggest that daptomycin may indeed directly interfere with cell wall synthesis or cell division, such effects still await direct experimental confirmation. Daptomycin's complex structure and biosynthesis have hampered the analysis of its structure activity relationships. Novel methods of total synthesis, including a recent one that is carried out entirely on a solid phase, will enable a more thorough and systematic exploration of the sequence space.