Phosphonate natural products are potent inhibitors of cellular metabolism with an established record of commercialization in medicine and biotechnology. Although genome mining has emerged as an accelerated method for the discovery of new phosphonates, a robust framework of their metabolism is needed to identify the pathways most likely to yield compounds with desired activities. Here we expand our understanding of these natural products by reporting the complete biosynthetic pathway for valinophos, a phosphonopeptide natural product containing the unusual (R)-2,3-dihydroxypropylphosphonate (DHPPA) scaffold. The pathway was defined by several enzymatic transformations and intermediates previously unknown to phosphonate natural products. A dedicated dehydrogenase served as a new phosphoenolpyruvate mutase coupling enzyme. Notably, its reduction of phosphonopyruvate to phosphonolactate defined a new early branchpoint in phosphonate biosynthesis. Functionally interconnected kinase and reductase enzymes catalyzed reactions reminiscent of glycolysis and arginine biosynthesis to produce a transient, but essential, phosphonolactaldehyde intermediate. We demonstrate esterification of l-valine onto DHPPA as a new biochemical activity for ATP-Grasp ligase enzymes. Unexpectedly, a second amino acid ligase then adjoined additional amino acids at the valinyl moiety to produce a suite of DHPPA-dipeptides. The genes for DHPPA biosynthesis were discovered among genomes of bacteria from wide-ranging habitats, suggesting a wealth of unknown compounds that may originate from this core pathway. Our findings establish new biosynthetic principles for natural products and provide definition to unexplored avenues for bioactive phosphonate genome mining.