Lasso peptides are ribosomally synthesized and post-translationally modified peptide (RiPP) natural products that display a unique lariat-like, threaded conformation. Owing to a locked three-dimensional structure, lasso peptides can be unusually stable toward heat and proteolytic degradation. Some lasso peptides have been shown to bind human cell-surface receptors and exhibit anticancer properties, while others display antibacterial or antiviral activities. All known lasso peptides are produced by bacteria and genome-mining studies indicate that lasso peptides are a relatively prevalent class of RiPPs; however, the discovery, isolation, and characterization of lasso peptides are constrained by the lack of an efficient production system. In this study, we employ a cell-free biosynthesis (CFB) strategy to address longstanding challenges associated with lasso peptide production. We report the successful use of CFB for the formation of an array of sequence-diverse lasso peptides that include known examples as well as a new predicted lasso peptide from Thermobifida halotolerans. We further demonstrate the utility of CFB to rapidly generate and characterize multisite precursor peptide variants to evaluate the substrate tolerance of the biosynthetic pathway. By evaluating more than 1000 randomly chosen variants, we show that the lasso-forming cyclase from the fusilassin pathway is capable of producing millions of sequence-diverse lasso peptides via CFB. These data lay a firm foundation for the creation of large lasso peptide libraries using CFB to identify new variants with unique properties.