Cyclic ribosomally derived peptides possess diverse bioactivities and are currently of major interest in drug development. However, it can be chemically challenging to synthesize these molecules, hindering the diversification and testing of cyclic peptide leads. Enzymes used in vitro offer a solution to this; however peptide macrocyclization remains the bottleneck. PCY1, involved in the biosynthesis of plant orbitides, belongs to the class of prolyl oligopeptidases and natively displays substrate promiscuity. PCY1 is a promising candidate for in vitro utilization, but its substrates require an 11 to 16 residue C-terminal recognition tail. We have characterized PCY1 both kinetically and structurally with multiple substrate complexes revealing the molecular basis of recognition and catalysis. Using these insights, we have identified a three residue C-terminal extension that replaces the natural recognition tail permitting PCY1 to operate on synthetic substrates. We demonstrate that PCY1 can macrocyclize a variety of substrates with this short tail, including unnatural amino acids and nonamino acids, highlighting PCY1's potential in biocatalysis.