Aminomalonic acid (Ama) is found in various natural products and protein hydrolysates of multiple organisms, but the understanding of its biosynthetic origin remains largely limited. By exploiting a biosynthetic gene cluster for ribosomally synthesized and post-translationally modified peptides (RiPPs), which are rich sources of new enzyme chemistry, we identified a novel two-enzyme pathway for Ama biosynthesis. This biosynthetic pathway, mediated by an Fe(II)/2-oxoglutarate-dependent oxygenase (Fe(II)/2OG), SmaO, and an atypical Fe(II)-dependent histidine-aspartate (HD) domain enzyme, SmaX, converts aspartate (Asp) to β-hydroxyaspartic acid (Hya) intermediate and ultimately to Ama. These tandem enzymatic reactions─hydroxylation of the carbon next to an acid functional group and subsequent four-electron oxidative bond cleavage in α-hydroxy acid─are similar to those associated with other known HD domain oxygenases, PhnZ and TmpB. However, SmaX also exhibits unique features, such as C-C bond cleavage in α-hydroxycarboxylate using a single Fe cofactor, in contrast to the C-P bond cleavage using a mixed-valent diiron cofactor in PhnZ and TmpB. Bioinformatic analysis reveals that this two-enzyme cascade may be present in various biosynthetic pathways for peptide natural products, including RiPPs and nonribosomal peptides (NRPs). Collectively, our study demonstrates the presence of a novel Ama biosynthetic pathway and suggests its widespread distribution in peptide natural product biosynthesis.