The structural and catalytic similarities between non-ribosomal peptide synthetase (NRPS) and polyketide synthase (PKS) support the idea of combining individual NRPS and PKS modules for combinatorial biosynthesis. Recent advances in cloning and characterization of biosynthetic gene clusters for naturally occurring hybrid polyketide-peptide metabolites have provided direct evidence for the existence of hybrid NRPS-PKS systems, thus setting the stage to investigate the molecular basis for intermodular communication between NRPS and PKS modules. Reviewed in this article are biosynthetic data pertinent to hybrid peptide-polyketide biosynthesis published up to late 2000. Hybrid peptide-polyketide natural products can be divided into two classes: (i) those whose biosyntheses do not involve functional interaction between NRPS and PKS modules; and (ii) those whose biosyntheses are catalyzed by hybrid NRPS-PKS systems involving direct interactions between NRPS and PKS modules. It is the latter systems that are most likely amenable to combinatorial biosynthesis. The same catalytic sites appear to be conserved in both hybrid NRPS-PKS and normal NRPS or PKS systems, with the exception of the ketoacyl synthase domains in hybrid NRPS-PKS systems which are unique. Specific linkers may play a critical role in communication, facilitating the transfer of the growing intermediates between the interacting NRPS and/or PKS modules. In addition, phosphopantetheinyl transferases with broad carrier protein specificity are essential for the production of functional hybrid NRPS-PKS megasynthetases. These findings should now be taken into consideration in engineered biosynthesis of hybrid peptide-polyketide natural products for drug discovery and development.