The ability of Mycobacterium tuberculosis (Mtb) to thrive within its host is due in part to its complex lipid metabolism, aspects of which remain poorly understood. We recently reported the production of N-acylated tyrazolones, a class of oxazolones, by the tyzACBgene cluster in Mtb. We now report that Mtb also produces N-acylated tryptazolones using a second biosynthetic cluster, trzAS. TrzA catalyzed the N-acylation of l-tryptophan with the highest specificity for C5:0-CoA among acyl-CoAs (kcat/Km = 2.3 ± 0.3 × 103M−1s−1). Similarly, TrzS, comprising a ThiF-like cyclase fused to a flavin-dependent oxidase, catalyzed the ATP-dependent cyclization and O2-dependent desaturation of the acylated amino acid to yield an N-acylated tryptazolone. Consistent with AlphaFold structural predictions, the D217A and R540A variants of TrzS were deficient in cyclase and desaturase activities, respectively. These variants and substrate-limitation studies established that the order of cyclization and desaturation is obligate, in contrast to the corresponding reactions in tyrazolone biosynthesis. Strains of Rhodococcus jostii RHA1 expressing trzAS from Mtb, Mycobacterium smegmatis, and RHA1, respectively, produced acyl-tryptophan and tryptazolones with different acyl chain lengths, indicating that the homologs have distinct substrate preferences. Using an optimized extraction method, tryptazolones were detected in M. smegmatis and RHA1. Finally, the acyl-tryptophan intermediates mainly accumulated in the culture supernatant, whereas tryptazolones were more abundant inside the cells. Elucidating the tryptazolone biosynthesis pathway in Mtb highlights the diversity of oxazolones in mycolic acid–producing bacteria, broadens our understanding of mycobacterial lipid metabolism, and opens exciting avenues for exploring the physiological roles of these small molecules.