Non-ribosomal peptide synthetases (NRPS) are multi-modular/domain enzymes that catalyze the synthesis of bioactive peptides. A crucial step in the process is peptide elongation accomplished by the condensation (C) domain with the aid of a peptidyl carrier or thiolation (T) domain. Here, we examined condensation reaction carried out by NRPS AmbB involved in biosynthesis of l-2-amino-4-methoxy-trans-3-butenoic acid (AMB) in P. aeruginosa. We determined crystal structures of the truncated T–C bidomain of AmbB in three forms, the apo enzyme with disordered T domain, the holo form with serine linked phosphopantetheine (Ppant) and a holo form with substrate (l-alanine) loaded onto Ppant. The two holo forms feature the T domain in a substrate-donation conformation. Mutagenesis combined with functional assays identified residues essential for the attachment of Ppant, anchoring the Ppant-l-Ala in the donor catalytic channel and the role of the conserved His953 in condensation activity. Altogether, these results provide structural insights into the condensation reaction at the donor site with a substrate-bound C domain of AmbB and lay the foundation for understanding the molecular mechanism of condensation which is crucial for AMB synthesis.