Padanamides are linear tetrapeptides notable for the absence of proteinogenic amino acids in their structures. In particular, two unusual heterocycles, (S)-3-amino-2-oxopyrrolidine-1-carboxamide (S-Aopc) and (S)-3-aminopiperidine-2,6-dione (S-Apd), are found at the C-termini of padanamides A and B, respectively. Here we identify the padanamide biosynthetic gene cluster and carry out systematic gene inactivation studies. Our results show that padanamides are synthesized by highly dissociated hybrid nonribosomal peptide synthetase/polyketide synthase machinery. We further demonstrate that carbamoyltransferase gene padQ is critical to the formation of padanamide A but dispensable for biosynthesis of padanamide B. Biochemical investigations show that PadQ carbamoylates the rare biosynthetic precursor l-2,4-diaminobutyrate, generating l-2-amino-4-ureidobutyrate, the presumed precursor to the C-terminal residue of padanamide A. By contrast, the C-terminal residue of padanamide B may derive from glutamine. An unusual thioesterase-catalyzed cyclization is proposed to generate the S-Aopc/S-Apd heterocycles.