The para-aminobenzoic acid-containing peptide albicidin is a pathogenicity factor synthesized by Xanthomonas albilineans in infections of sugar cane. Albicidin is a nanomolar inhibitor of the bacterial DNA gyrase with a strong activity against various Gram-negative bacteria. The bacterium Pantoea dispersa expresses the hydrolase AlbD, conferring natural resistance against albicidin. We show that AlbD is a novel type of endopeptidase that catalyzes the cleavage of albicidin at a peptide backbone amide bond, thus abolishing its antimicrobial activity. Additionally, we determined the minimal cleavage motif of AlbD with substrates derived by chemical synthesis. Our results clearly identify AlbD as a unique endopeptidase that is the first member of a new subfamily of peptidases. Our findings provide the molecular basis for a natural detoxification mechanism, potentially rendering a new tool in biological chemistry approaches.