Caprazamycins are potent anti-mycobacterial liponucleoside antibiotics isolated from Streptomyces sp. MK730-62F2 and belong to the translocase I inhibitor family. Their complex structure is derived from 5'-(beta-O-aminoribosyl)-glycyluridine and comprises a unique N-methyldiazepanone ring. The biosynthetic gene cluster has been identified, cloned, and sequenced, representing the first gene cluster of a translocase I inhibitor. Sequence analysis revealed the presence of 23 open reading frames putatively involved in export, resistance, regulation, and biosynthesis of the caprazamycins. Heterologous expression of the gene cluster in Streptomyces coelicolor M512 led to the production of non-glycosylated bioactive caprazamycin derivatives. A set of gene deletions validated the boundaries of the cluster and inactivation of cpz21 resulted in the accumulation of novel simplified liponucleoside antibiotics that lack the 3-methylglutaryl moiety. Therefore, Cpz21 is assigned to act as an acyltransferase in caprazamycin biosynthesis. In vivo and in silico analysis of the caprazamycin biosynthetic gene cluster allows a first proposal of the biosynthetic pathway and provides insights into the biosynthesis of related uridyl-antibiotics.