The lipopeptide daptomycin is used as an antibiotic to treat severe infections with gram-positive pathogens, such as methicillin resistant Staphylococcus aureus (MRSA) and drug-resistant enterococci. Its precise mechanism of action is incompletely understood, and a specific molecular target has not been identified. Here we show that Ca2+-daptomycin specifically interacts with undecaprenyl-coupled cell envelope precursors in the presence of the anionic phospholipid phosphatidylglycerol, forming a tripartite complex. We use microbiological and biochemical assays, in combination with fluorescence and optical sectioning microscopy of intact staphylococcal cells and model membrane systems. Binding primarily occurs at the staphylococcal septum and interrupts cell wall biosynthesis. This is followed by delocalisation of components of the peptidoglycan biosynthesis machinery and massive membrane rearrangements, which may account for the pleiotropic cellular events previously reported. The identification of carrier-bound cell wall precursors as specific targets explains the specificity of daptomycin for bacterial cells. Our work reconciles apparently inconsistent previous results, and supports a concise model for the mode of action of daptomycin.