AbstractHistorically, small molecules biosynthesised by bacteria have been an excellent source for antibacterial drugs. Today, however, the rediscovery of known compounds is a significant hurdle to developing new antimicrobials. Here we use a genome mining and synthetic biology approach to discover the ambocidins: calcium‐dependent lipodepsipeptides that are active against drug‐resistant Gram‐positive pathogens. By cloning a silent biosynthetic gene cluster (the amb cluster) from Streptomyces ambofaciens ATCC 2387 and integrating this into the chromosome of Streptomyces avermitilis we induce expression of ambocidin A and B: two new Nϵ‐hydroxyarginine‐containing cyclic lipodepsipeptides active against drug‐resistant Gram‐positive pathogens. Using a panel of Streptomyces host strains, we show that the choice of heterologous host is critical for producing the biologically active compounds, and that inappropriate host choice leads to aberrant production inactive derivatives. We show that Nϵ‐hydroxyarginine is the product of a heme‐dependent oxygenase and that it enhances biological activity. Ambocidin A inhibits cell wall biosynthesis by binding to Lipid II at a different site than vancomycin. Furthermore, unlike daptomycin, ambocidin A retains potent antimicrobial activity in the presence of lung surfactant, giving it the potential to treat bacterial pneumonia. Our work expands the family of calcium‐dependent lipopeptide antibiotics with a new member exhibiting a distinct mechanism of action.