Thiostrepton (TSR), an archetypal bimacrocyclic thiopeptide antibiotic that arises from complex posttranslational modifications of a genetically encoded precursor peptide, possesses a quinaldic acid (QA) moiety within the side-ring system of a thiopeptide-characteristic framework. Focusing on selective engineering of the QA moiety, i.e., by fluorination or methylation, we have recently designed and biosynthesized biologically more active TSR analogs. Using these analogs as chemical probes, we uncovered an unusual indirect mechanism of TSR-type thiopeptides, which are able to act against intracellular pathogens through host autophagy induction in addition to direct targeting of bacterial ribosome. Herein, we report the accumulation of 6′-fluoro-7′, 8′-epoxy-TSR, a key intermediate in the preparation of the analog 6′-fluoro-TSR. This unexpected finding led to unveiling of the TSR maturation process, which involves an unusual dual activity of TsrI, an α/β-hydrolase fold protein, for cascade C-N bond cleavage and formation during side-ring system construction. These two functions of TsrI rely on the same catalytic triad, Ser72-His200-Asp191, which first mediates endopeptidyl hydrolysis that occurs selectively between the residues Met-1 and Ile1 for removal of the leader peptide and then triggers epoxide ring opening for closure of the QA-containing side-ring system in a regio- and stereo-specific manner. The former reaction likely requires the formation of an acyl-Ser72 enzyme intermediate; in contrast, the latter is independent of Ser72. Consequently, C-6′ fluorination of QA lowers the reactivity of the epoxide intermediate and, thereby, allows the dissection of the TsrI-associated enzymatic process that proceeds rapidly and typically is difficult to be realized during TSR biosynthesis.