Bioconversion of peptidyl amino acids into enzyme cofactors is an important post-translational modification. Here, we report a flavoprotein, essential for biosynthesis of a protein-derived quinone cofactor, cysteine tryptophylquinone, contained in a widely distributed bacterial enzyme, quinohemoprotein amine dehydrogenase. The purified flavoprotein catalyzes the single-turnover dihydroxylation of the tryptophylquinone-precursor, tryptophan, in the protein substrate containing triple intra-peptidyl crosslinks that are pre-formed by a radical S-adenosylmethionine enzyme within the ternary complex of these proteins. Crystal structure of the peptidyl tryptophan dihydroxylase reveals a large pocket that may dock the protein substrate with the bound flavin adenine dinucleotide situated close to the precursor tryptophan. Based on the enzyme-protein substrate docking model, we propose a chemical reaction mechanism of peptidyl tryptophan dihydroxylation catalyzed by the flavoprotein monooxygenase. The diversity of the tryptophylquinone-generating systems suggests convergent evolution of the peptidyl tryptophan-derived cofactors in different proteins.