Peptide synthetases are large multienzyme complexes that catalyze the non-ribosomal synthesis of a structurally diverse family of bioactive peptides. They possess a multidomain structure and employ the thiotemplate mechanism to activate, modify and link together by amide or ester bonds the constituent amino acids of the peptide product. The domains, which represent the functional building units of peptide synthetases, appear to act as independent enzymes whose specific linkage order forms the protein-template that defines the sequence of the incorporated amino acids. Two types of domains have been characterized in peptide synthetases of bacterial and fungal origin: type I comprises about 600 amino acids and contains at least two modules involved in substrate recognition, adenylation and thioester formation, whereas type II domains carry in addition an insertion of about 430 amino acids that may function as a N-methyltransferase module. The role of other genes associated with bacterial operons encoding peptide synthetases is also discussed.