The tripeptide delta-L-alpha-aminoadipyl-L-cysteinyl-D-valine (LLD-ACV) is synthesised by the multifunctional enzyme ACV synthetase integrating four steps of the penicillin and cephalosporin biosynthetic pathway. Peptide synthesis follows the thiotemplate mechanism from intermediates bound as thioesters to the enzyme. The formation of delta-(L-alpha-aminoadipyl)-L-cysteinyl-thioester in the absence of L-valine was shown by isolation of the enzyme-substrate complex and cleavage of the covalently bound intermediate with performic acid. The dipeptide was recovered as cysteic acid or cysteic acid oxime and detected by HPLC and MALDI-TOF mass spectrometry. We conclude that the first peptide bond is formed between delta-carboxyl of L-aminoadipic acid and L-cysteine, followed by addition of the dipeptidyl intermediate to L-valine.