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Vancomycin is naturally produced by the soil bacterium Amycolatopsis orientalis <ref name="Grace"> Grace, Y., Koteva, K.P., Thaker & Thaker, M.N. (2013). Glycopeptide antibiotic biosynthesis. The Journal of Antibiotics, 67, 31-41. DOI: 10.1038/ja.2013.117 </ref>. It is a glycosylated nonribosomal peptide, which means that it is biosynthesized by the bacterium without the use of mRNA or a ribosome, through means of nonribosomal peptide synthesis. It is a heptapeptide consisting of of the following amino acids: Leucine1 Leucine₁ (Leu1Leu₁), β-hydroxytyrosine2 hydroxytyrosine₂ (β-OH-Tyr2Tyr₂), Asparagine3 Asparagine₃ (Asn3Asn₃), 4-hydroxyphenylglycine4 hydroxyphenylglycine₄ (HPG4HPG₄), HPG5HPG₅, β-OH-Tyr6Tyr₆, 3,5-dihydroxyphenylglycine7 dihydroxyphenylglycine₇ (DPG7DPG₇). Of these seven only Asn3 Asn₃ and Leu1 Leu₁ are proteinogenic amino acids, the rest being non-proteinogenic or non-coded amino acids. The stereoisomeric configuration of the amino acid residues in the heptapeptide scaffold of vancomycin is D-D-L-L-D-D-L.<ref name="Nolan"> Nolan, E. M., & Walsh, C. T. (2009). How Nature Morphs Peptide Scaffolds into Antibiotics. Chembiochem : A European Journal of Chemical Biolo1, 10(1), 34–53. http://doi.org/10.1002/cbic.200800438 </ref>

Once the basic heptapeptide scaffold is assembled, further post translational modifications take place on the molecule. First, residues 2 and 4, 4 and 6, and 5 and 7, undergo oxidative crosslinking, become covalently bonded to each other, forming the highly rigid, dome-like structure of vancomycin. This conformation is what gives vancomycin its high affinity for forming hydrogen-bonds with its target - the N-acyl-D-Ala-D-Ala termini of the peptidoglycan precursors in bacteria. The molecule in this state is biologically active and is termed the aglycone backbone of vancomycin<ref name="Reynolds"> Reynolds, P.E. (1989). Structure, Biochemistry and Mechanism of Action of Glycopeptide Antibiotics. European Journal of Clinical Microbiolo1 and Infectious Diseases, 8(11), 943-950. https://doi.org/10.1007/BF01967563 </ref> . Finally, the Leucine is methylated to N-methyleucine, and two successive glycosylations on the ph2late phenolate of the HPG residue give the finished vancomycin molecule. These further modifications are not essential for the antibiotic functionality of vancomycin though they do allow for stronger interactions with the target. <ref name="Nolan" />

A single peptidoglycan layer consists of many crosslinked glycan chains. A glycan chain is made up of repeating units of covalently bonded N-acetylglucosamine (NAG) and N-acetylmuramic acid (NAM) monomers joined together through transglycosylation. The newly elongated chains are mechanically weak till the pentapeptide chains found on every NAM molecule are crosslinked. This is done by a family of transpeptidases, which use the amide group of the Lys3 Lys₃ on one strand to attack the D-Ala4 Ala₄ on the other strand, liberating a D-Ala5 Ala₅ residue, and forming a Lys3Lys₃-D-Ala4 Ala₄ interstrand isopeptide bond which acts as a strengthening covalent cross-link between the two strands.<ref name="Kahne" />

Vancomycin belongs to a class of antibiotics which interferes in both the polymerization and the cross linking of glycan strands. It does this by binding firmly to the substrate of the transpeptidation enzymes, the D-Ala4Ala₄-D-Ala5 Ala₅ dipeptide, by means of five hydrogen bonds with its peptide backbone <ref name="Reynolds" /> <ref name="Bam"> Bambeke, F. van, Laethem, Y. van, Courvalin, P. & Tulkens, P.M. (2004) Glycopeptide Antibiotics from Conventional Molecules to New Derivatives. Drugs, 64(9), 913-936. </ref>. The formation of this complex prevents both transglycosylation and transpeptidation via steric hindrance<ref name="Bam" />.