Proteases can catalyze both peptide bond cleavage and formation, yet the hydrolysis reaction dominates in nature. This presents an interesting challenge for the biosynthesis of backbone cyclized (circular) proteins, which are encoded as part of precursor proteins and require post-translational peptide bond formation to reach their mature form. The largest family of circular proteins are the plant-produced cyclotides; extremely stable proteins with applications as bioengineering scaffolds. Little is known about the mechanism by which they are cyclized in vivo but a highly conserved Asn (occasionally Asp) residue at the C terminus of the cyclotide domain suggests that an enzyme with specificity for Asn (asparaginyl endopeptidase; AEP) is involved in the process. Nicotiana benthamiana does not endogenously produce circular proteins but when cDNA encoding the precursor of the cyclotide kalata B1 was transiently expressed in the plants they produced the cyclotide, together with linear forms not commonly observed in cyclotide-containing plants. Observation of these species over time showed that in vivo asparaginyl bond hydrolysis is necessary for cyclization. When AEP activity was suppressed, either by decreasing AEP gene expression or using a specific inhibitor, the amount of cyclic cyclotide in the plants was reduced compared with controls and was accompanied by the accumulation of extended linear species. These results suggest that an AEP is responsible for catalyzing both peptide bond cleavage and ligation of cyclotides in a single processing event.