Cyclosporin synthetase, a multifunctional polypeptide, catalyses the biosynthesis of the set of natural cyclosporins. We report that this enzyme is also capable of introducing a beta-alanine into position 7 or 8 of the ring instead of the alpha-alanines present at these positions in cyclosporin A. This leads to 34-membered rings in contrast to the 33-membered ring of the cyclo-undecapeptide cyclosporin A. Both [beta Ala7]CyA and [beta Ala8]CyA show immunosuppressive activity. The cyclosporin synthetase-related enzyme peptolide SDZ 214-103 synthetase, on the other hand, does not incorporate either beta-alanine into position 7 or beta-hydroxy acids into position 8, confirming the previously described higher substrate specificity of this enzyme compared with cyclosporin synthetase [Lawen and Traber (1993) J. Biol. Chem. 268, 20452-20465].