Penicillin-binding proteins (PBPs) are enzymes involved in the assembly of the bacterial cell wall, a major target for antibiotics. These proteins are classified by mass into high molecular weight PBPs, which are transpeptidases that form peptidoglycan crosslinks, and low molecular weight PBPs, which are typically hydrolases. We report a functionally unique family of low molecular weight PBPs that act as transpeptidases rather than hydrolases, but they do not crosslink peptidoglycan. We show that these PBPs can exchange D-amino acids bearing chemical tags or affinity handles into peptidoglycan precursors, including Lipid II, enabling biochemical studies of proteins involved in cell wall assembly. We report that, in two organisms, the PBPs incorporate lysine into peptidoglycan and, further, that this linkage can occur via attack of the primary ε-amine side chain, an unprecedented reaction for a PBP.