Echinocandins are antifungal nonribosomal hexapeptides produced by fungi. Two of the amino acids are hydroxy-l-prolines: -4-hydroxy-l-proline and, in most echinocandin structures, (-2,3)-3-hydroxy-(-2,4)-4-methyl-l-proline. In the case of echinocandin biosynthesis by , both amino acids are found in pneumocandin A, while in pneumocandin B the latter residue is replaced by -3-hydroxy-l-proline (3-Hyp). We have recently reported that all three amino acids are generated by the 2-oxoglutarate-dependent proline hydroxylase GloF. In echinocandin B biosynthesis by species, 3-Hyp derivatives have not been reported. Here we describe the heterologous production and kinetic characterization of HtyE, the 2-oxoglutarate-dependent proline hydroxylase from the echinocandin B biosynthetic cluster in Surprisingly, l-proline hydroxylation with HtyE resulted in an even higher proportion (∼30%) of 3-Hyp than that with GloF. This suggests that the selectivity for methylated 3-Hyp in echinocandin B biosynthesis is due solely to a substrate-specific adenylation domain of the nonribosomal peptide synthetase. Moreover, we observed that one product of HtyE catalysis, 3-hydroxy-4-methyl-l-proline, is slowly further oxidized at the methyl group, giving 3-hydroxy-4-hydroxymethyl-l-proline, upon prolonged incubation with HtyE. This dihydroxylated amino acid has been reported as a building block of cryptocandin, an echinocandin produced by Secondary metabolites from bacteria and fungi are often produced by sets of biosynthetic enzymes encoded in distinct gene clusters. Usually, each enzyme catalyzes one biosynthetic step, but multiple reactions are also possible. Pneumocandins A and B are produced by the fungus They belong to the echinocandin family, a group of nonribosomal cyclic lipopeptides that exhibit a strong antifungal activity. Chemical derivatives are important drugs for the treatment of systemic fungal infections. We have recently shown that in the biosynthesis of pneumocandins A and B, three hydroxyproline building blocks are provided by one proline hydroxylase. Here we demonstrate that the proline hydroxylase from echinocandin B biosynthesis in produces the same hydroxyprolines, with an increased proportion of-3-hydroxyproline. However, echinocandin B biosynthesis does not require -3-hydroxyproline; its formation remains cryptic. While one can only speculate on the evolutionary background of this unexpected finding, proline hydroxylation in and provides an unusual insight into peptide antibiotic biosynthesis-namely, the complex interplay between the selectivity of a hydroxylase and the substrate specificity of a nonribosomal peptide synthetase.