Cyanobactins are small cyclic peptides that are produced by a diverse selection of cyanobacteria living in symbioses as well as terrestrial, marine, or freshwater environments. They include compounds with antimalarial, antitumor, and multidrug reversing activities and potential as pharmaceutical leads. Cyanobactins are produced through the proteolytic cleavage and cyclization of precursor peptides coupled with further posttranslational modifications such as heterocyclization, oxidation, or prenylation of amino acids. Cyanobactin gene clusters encode two proteases which cleave and cyclisize the precursor peptide as well as proteins participating in posttranslational modifications. The bioinformatic mining of cyanobacterial genomes has led to the discovery of novel cyanobactins. Heterologous expression of these gene clusters provided insights into the role of the genes participating in the biosynthesis of cyanobactins and facilitated the rational design of novel peptides. Enzymes participating in the biosynthesis of cyanobactins may prove useful as catalysts for producing novel cyclic peptides in the future. The recent discovery of the cyanobactin biosynthetic pathway in cyanobacteria extends our knowledge of their potential as producers of interesting metabolites.