Biosynthesis of MR-387 by Streptomyces neyagawaensis SL-387 was studied by testing the incorporation of radioactive precursors and the detection of biosynthetic enzyme. L-Phenylalanine, L-valine, L-proline, and acetic acid were efficiently incorporated into MR-387, but phenylethylamine and oxalic acid were not. These results suggest that the (2S,3R)-3-amino-2-hydroxy-4-phenylbutanoic acid moiety of MR-387 is synthesized from phenylalanine and acetic acid but not directly via the phenylethylamine. Synthesis of MR-387 is mediated by a peptide synthetase with a novel activity.