The cell-free extract prepared from cells of an albonoursin-producing actinomycete Streptomyces sp. KO2388 was found to catalyze the dehydrogenation of cyclo (L-Phe-L-Leu) (CFL) to albonoursin. This is the first report for the dehydrogenation at the α,β-positions of amino acid residues. The simple method for determining the dehydrogenation activity was devised by measuring the increase in UV absorption of the reaction mixture at 317nm, λmax(ε25,400) of albonoursin, where CFL had no absorption. Phenazine methosulfate was the most active cofactor for the dehydrogenation among several hydrogen acceptors.