Nocardiopsis alba is frequently isolated from environment and has recently been suggested as a casual symbiotic actinobacterium of diverse invertebrates. Using activity-guided fractionation, we purified two antibacterial cyclic dipeptides, cyclo(ΔPhe-ΔLeu) (albonoursin) and cyclo(ΔmTyr-ΔLeu), from a culture of Nocardiopsis alba ATCC BAA-2165. Analysis of N. alba genome revealed genetic information similar to albonoursin biosynthetic gene cluster, albABC. An albABC gene deletion mutant of N. alba was generated. Liquid chromatography-mass spectrometry analysis showed that the mutant could not produce the cyclic dipeptides. Cyclic dipeptide production in the mutant was restored by genetic complementation with the albABC cloned in a native plasmid of Nocardiopsis. β-Glucuronidase reporter assays with a second mutant construct, in which albABC promoter is transcriptionally fused to the reporting gene gusA, indicated that albABC gene expression was subject to osmoregulation. The system presented will be used to study the metabolic and genetic control of cyclic dipeptide biosynthesis in Nocardiopsis.