Complete genome sequencing of the alkaliphilic bacterium Bacillus halodurans C-125 revealed the presence of several genes homologous to those involved in the production of lantibiotic peptides. Additional bioinformatic analysis identified a total of eleven genes, spanning a 15 kbp region, potentially involved in the production, modification, immunity and transport of a two-peptide lantibiotic. Having established that strain C-125 exhibited antimicrobial activity against a wide range of Gram-positive bacteria, it was demonstrated through peptide purification, MS and site-directed mutagenesis that this activity was indeed attributable to the production of a lantibiotic encoded by these genes. This antimicrobial has been designated haloduracin and represents the first occasion wherein production of two-peptide lantibiotic has been associated with a Bacillus sp. It is also the first example of a lantibiotic of any kind to be produced by an alkaliphilic species.