Microcin C is a heptapeptide-adenylate antibiotic produced by some strains of Escherichia coli. Its peptide part is responsible for facilitated transport inside sensitive cells where it is proteolyzed with release of a toxic warhead-a nonhydrolyzable aspartamidyl-adenylate, which inhibits aspartyl-tRNA synthetase. Recently, a microcin C homologue from Bacillus amyloliquefaciens containing a longer peptide part modified with carboxymethyl-cytosine instead of adenosine was described, but no biological activity of this compound was revealed. Here, we characterize modified peptide-cytidylate from Yersinia pseudotuberculosis. As reported for B. amyloliquefaciens homologue, the initially synthesized compound contains a long peptide that is biologically inactive. This compound is subjected to endoproteolytic processing inside producing cells by the evolutionary conserved T1dD/E protease. As a result, an 11-amino acid long peptide with C-terminal modified cytosine residue is produced. This compound is exported outside the producing cell and is bioactive, inhibiting sensitive cells in the same way as E. coli microcin C. Proteolytic processing inside producing cells is a novel strategy of peptide-nucleotide antibiotics biosynthesis that may help control production levels and avoid toxicity to the producer.