Corallorazines are cyclic lipodipeptide natural products produced by the myxobacterium Corallococcus coralloides B035. To decipher the basis of corallorazine biosynthesis, the corallorazine nonribosomal peptide synthetase (NRPS) biosynthetic gene cluster crz was identified and analyzed in detail. Here, we present a model of corallorazine biosynthesis, supported by bioinformatic analyses and in vitro investigations on the bimodular NRPS synthesizing the corallorazine core. Corallorazine biosynthesis shows several distinct features, such as the presence of a dehydrating condensation domain, and a unique split adenylation domain on two open reading frames. Using an alternative fatty acyl starter unit, the first steps of corallorazine biosynthesis were characterized in vitro, supporting our biosynthetic model. The dehydrating condensation domain was bioinformatically analyzed in detail and compared to other modifying C domains, revealing unreported specific sequence motives for this domain subfamily. Using global bioinformatics analyses, we show that the crz gene cluster family is widespread among bacteria and encodes notable chemical diversity. Corallorazine A displays moderate antimicrobial activity against selected Gram-positive and Gram-negative bacteria. Mode of action studies comprising whole cell analysis and in vitro test systems revealed that corallorazine A inhibits bacterial transcription by targeting the DNA-dependent RNA polymerase.