The lipopeptide daptomycin is a member of the newest FDA-approved antimicrobial class, exhibiting potency against a broad range of Gram-positive pathogens with only rare incidences of clinical resistance. Environmental bacteria harbor an abundance of resistance determinants orthologous to those in pathogens and thus may serve as an early-warning system for future clinical emergence. A collection of morphologically diverse environmental actinomycetes demonstrating unprecedented frequencies of daptomycin resistance and high levels of resistance by antibiotic inactivation was characterized to elucidate modes of drug inactivation. In vivo studies revealed that hydrolysis plays a key role, resulting in one or both of the following structural modifications: ring hydrolysis resulting in linearization (in 44% of inactivating isolates) or deacylation of the lipid tail (29%). Characterization of the mechanism in actinomycete WAC4713 (a Streptomyces sp. with an MIC of 512 μg/ml) demonstrated a constitutive resistance phenotype and established daptomycin's circularizing ester linkage to be the site of hydrolysis. Characterization of the hydrolase responsible revealed it to be likely a serine protease. These studies suggested that daptomycin is susceptible to general proteolytic hydrolysis, which was further supported by studies using proteases of diverse origin. These findings represent the first comprehensive characterization of daptomycin inactivation in any bacterial class and may not only presage a future mechanism of clinical resistance but also suggest strategies for the development of new lipopeptides.