Formylation is an important part of ribosomal peptide synthesis of prokaryotes. In nonribosomal peptide synthesis, however, N-formylation is rather unusual and therefore so far unexplored. In this work, the first module of the linear gramicidin nonribosomal peptide synthetase, LgrA1, consisting of a hypothetical formylation domain, an adenylation, and a peptidyl carrier protein domain was tested for formyltransferase activity in vitro. We demonstrate here that the putative formylation domain does indeed transfer the formyl group of formyltetrahydrofolate (fH4F) onto the first amino acid valine using both cofactors N10- and N5-fH4F, respectively. Most important, the necessity of the formylated starter unit formyl-valine for the initiation of the gramicidin biosynthesis was tested by elongation assays with the bimodular system from LgrA. By omitting the formyl group donor, no condensation product of valine with the subsequent building block glycine was detected, whereas the dipeptide formyl-valyl-glycine was found when assayed in the presence of either formyl donor. The proven formylation activity of the first domain of LgrA represents a novel tailoring enzyme in nonribosomal peptide synthesis.