Several nonribosomal peptide natural products are composites of alpha-hydroxy acid and alpha-amino acid monomers. Cereulide, the emetic toxin from the human pathogen Bacillus cereus, and valinomycin, from Streptomyces spp., are closely related macrocyclic K+ ionophores. The macrocyclic core of each natural product contains alternating peptide (six) and ester (six) bonds, and their cyclododecadepsipeptide structures consist of a tetradepsipeptide unit repeated three times. Here we overexpress the cereulide NRPS alpha-hydroxy acid specifying modules from CesA and CesB and demonstrate that each contains an alpha-keto acid activating adenylation domain and a chiral alpha-ketoacyl-S-carrier protein reductase (alpha-KR). The logic used by the cereulide NRPS is likely at work in the valinomycin NRPS and may be the general strategy used in bacterial NRPSs to form alpha-hydroxy acid containing natural products.