Cyclodipeptide synthases (CDPSs) catalyze the synthesis of diverse cyclodipeptides (CDPs) by utilizing two aminoacyl-tRNA (aa-tRNA) substrates in a sequential ping-pong reaction mechanism. Numerous CDPSs have been characterized to provide precursors for diketopiperazines (DKPs) with diverse structural characteristics and biological activities. BcmA, belonging to the XYP subfamily, is a cyclo(L-Ile-L-Leu)-synthesizing CDPS involved in the biosynthesis of the antibiotic bicyclomycin. The structural basis and determinants influencing BcmA enzyme activity and substrate selectivity are not well understood. Here, we report the crystal structure of SsBcmA from Streptomyces sapporonensis. Through structural comparison and systematic site-directed mutagenesis, we highlight the significance of key residues located in the aminoacyl-binding pocket for enzyme activity and substrate specificity. In particular, the nonconserved residues D161 and K165 in pocket P2 are essential for the activity of SsBcmA without significant alteration of the substrate specificity, while the conserved residues F158 as well as F210 and S211 in P2 are responsible for determining substrate selectivity. These findings facilitate the understanding of how CDPSs selectively accept hydrophobic substrates and provide additional clues for the engineering of these enzymes for synthetic biology applications.