The recently identified natural product NOSO‐95A from entomopathogenic Xenorhabdus bacteria, derived from a biosynthetic gene cluster (BGC) encoding a non‐ribosomal peptide synthetase (NRPS), was the first member of the odilorhabdin class of antibiotics. This class exhibits broad‐spectrum antibiotic activity and inspired the development of the synthetic derivative NOSO‐502, which holds potential as a new clinical drug by breaking antibiotic resistance. While the mode of action of odilorhabdins was broadly investigated, their biosynthesis pathway remained poorly understood. Here we describe the heterologous production of NOSO‐95A in Escherichia coli after refactoring the complete BGC. Since the production titer was low, NRPS engineering was applied to uncover the underlying biosynthetic principles. For this, modules of the odilorhabdin NRPS fused to other synthetases were co‐expressed with candidate hydroxylases encoded in the BGC allowing the characterization of the biosynthesis of three unusual amino acids and leading to the identification of a prodrug‐activation mechanism by deacylation. Our work demonstrates the application of NRPS engineering as a blueprint to mechanistically elucidate large or toxic NRPS and provides the basis to generate novel odilorhabdin analogues with improved properties in the future.