Bacilysin, a dipeptide antibiotic produced byBacillus subtilis A 14, was synthesized by a cell-free extract of the producing organism from its constitutent amino acids,l-alanine andl-anticapsin. The synthesis required ATP and Mg2+ and was optimal at pH 8.1. The same extract also synthesizedl-alanyl-l-alanine. The synthesis of bacilysin was not inhibited by chloramphenicol, DNase or RNase.