Plant cyclotides are the largest family of gene-encoded cyclic proteins. They act as host defense molecules to protect plants and are promising candidates as insecticidal and nematocidal agents in agriculture. For this promise to be realized a greater understanding of the post-translational processing of these proteins is needed. Cyclotides are cleaved from precursor proteins with subsequent ligation of the N and C termini to form a continuous peptide backbone. This cyclization step is inefficient in transgenic plants and our work aims to shed light on the specificity requirements at the excision sites for cyclic peptide production. Using the prototypic cyclotide kalata B1 (kB1) expressed from the Oak1 gene, MALDI-TOF mass spectrometry was used to examine the cyclization efficiency when mutants of the Oak1 gene were expressed in transgenic Nicotiana benthamiana. Cleavage at the N terminus of the cyclotide domain occurs rapidly with no strict specificity requirements for amino acids at the cleavage site. In contrast, the C-terminal region of the cyclotide domain in the P2, P1, P1', and P2' positions is highly conserved and only specific amino acids can occupy these positions. The cyclization reaction requires an Asn at position P1 followed by a small amino acid (Ala, Gly, Ser) at the P1' position. The P2' position must be filled by Leu or Ile; in their absence an unusual post-translational modification occurs. Substitution of the P2' Leu with Ala leads to hydroxylation of the neighboring proline. Through mutational analysis this novel proline hydroxylation motif was determined to be Gly-Ala-Pro-Ser.