The assembly line biosynthesis of the powerful anticancer-antiviral didemnin cyclic peptides is proposed to follow a prodrug release mechanism in Tristella bacteria. This strategy commences with the formation of N-terminal prodrug scaffolds and culminates in their cleavage during the cellular export of the mature products. In this study, a comprehensive exploration of the genetic and biochemical aspects of the enzymes responsible for both the assembly and cleavage of the acylated peptide prodrug scaffolds is provided. This process involves the assembly of N-acyl-polyglutamine moieties orchestrated by the nonribosomal peptide synthetase DidA and the cleavage of these components at the post-assembly stage by DidK, a transmembrane CAAX hydrolase homolog. The findings not only shed light on the complex prodrug mechanism that underlies the synthesis and secretion of didemnin compounds but also offer novel insights into the expanded role of CAAX hydrolases in microbes. Furthermore, this knowledge can be leveraged for the strategic design of genome mining approaches aimed at discovering new bioactive natural products that employ similar prodrug biochemical strategies.