Biosynthesis of the dipeptide antibiotic bacilysin, encoded by the seven Bacillus subtilis genes bacA-G, involves diversion of flux from prephenate to the noncognate amino acid anticapsin. The anticapsin warhead is then ligated to the C-terminus of l-alanine to produce mature bacilysin. We have previously noted the formation of two diastereomers of tetrahydrotyrosine (4S- and 4R-H(4)Tyr) by tandem action of the four purified enzymes BacABGF. BacC (oxidase) and BacD (ligase) have been hypothesized to be remaining late stage enzymes in bacilysin biosynthesis. Using a combination of BacCD in vitro studies, B. subtilis deletion mutants, and isotopic feeding studies, we were able to determine that the H(4)Tyr diastereomers are actually shunt products that are not on-pathway to bacilysin biosynthesis. Dihydroanticapsin and dihydrobacilysin accumulate in extracts of a ΔbacC strain and are processed to anticapsin and then bacilysin upon addition of BacC and BacD, respectively. These results suggest the epoxide group in bacilysin is installed in an earlier step of bacilysin biosynthesis, while BacC oxidation of the C(7)-hydroxyl and the subsequent BacD ligation of anticapsin to l-Ala are the penultimate and ultimate steps of bacilysin biosynthesis, respectively.