Lasso peptides are ribosomally synthesized and post-translationally modified peptide (RiPP) natural products that display a unique lariat-like structure. Owing to a rigid topology, lasso peptides are unusually stable towards 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. Known lasso peptides are produced by bacteria and genome-mining studies indicate that lasso peptides are a relatively prevalent RiPP class; 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 the longstanding challenges associated with lasso peptide production. We report the successful formation of a diverse array of 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 in order to evaluate the substrate tolerance of the biosynthetic pathway. We show that the lasso-forming cyclase from the fusilassin pathway can produce millions of sequence-diverse lasso peptides via CFB with an extraordinary level of sequence permissiveness within the ring region of the lasso peptide. These data lay a firm foundation for the creation of large lasso peptide libraries using CFB to identify new variants with unique properties.