The cell-free extract of an albonoursin-producing strain <i>Streptomyces albulus</i> KO-23 catalyzes the conversion of cyclo(L-Leu-L-Phe) (<b>1</b>) to albonoursin (<b>2</b>). At the early stage of this conversion, two compounds were newly formed prior to albonoursin synthesis in the reaction mixture. These compounds were isolated and identified as (<i>Z</i>)-3-benzylidene-6-isobutyl-2, 5-piperazinedione (<b>4</b>) and (<i>Z</i>)-3-benzyl-6-isobutylidene-2, 5-piperazineclione (<b>3</b>). The cell-free extract also catalyzed the conversion of compound <b>3</b> or <b>4</b> to albonoursin. From these results, albonoursin was found to be biosynthesized <i>via</i> these compounds from cyclo(L-Leu-L-Phe). These didehydro diketopiperazines exhibited no inhibitory activity toward the first cleavage of sea urchin embryo in contrast to the higher cytotoxicity for albonoursin, indicating that dehydrogenation at α, β-positions of both amino acid residues in diketopiperazines is required for cytotoxicity.