A large family of cytotoxic cyclic peptides exemplified by the patellamides has been isolated from ascidians harboring the obligate cyanobacterial symbionts Prochloron spp.. Genome sequence analysis of these symbionts has revealed that Prochloron spp. synthesize patellamides by a ribosomal pathway. To understand how this pathway evolved to produce a suite of related metabolites, we analyzed 46 prochloron-containing ascidians from the tropical Pacific Ocean for the presence of patellamide biosynthetic genes and taxonomic markers. Here, we show that Prochloron spp. generate a diverse library of patellamides using small, hypervariable cassettes within a conserved genetic background. Each symbiont strain contains a single pathway, and mixtures of symbionts within ascidians lead to the accumulation of chemical libraries. We used this information to engineer the production of a new cyclic peptide in Escherichia coli, thereby demonstrating the power of comparative analysis of closely related symbiotic pathways to direct the genetic synthesis of new molecules.