Mushrooms in the genus Amanita account for >90% of fatal mushroom poisonings. The active compounds, amatoxins (e.g., alpha-amanitin) and phallotoxins (e.g., phalloidin), are bicyclic octa- and hepta-peptides. The Amanita toxins are biosynthesized on ribosomes as proproteins of 34 (phallotoxins) or 35 (amatoxins) amino acids. The genes for alpha-amanitin (AMA1) and phallacidin (PHA1) are present in species of Amanita (section Phalloideae) that make these toxins but are absent from other, toxin nonsynthesizing species. Toxin-producing mushrooms have >20 additional DNA sequences (the “MSDIN” family) related to AMA1 and PHA1, which are predicted to make additional, undescribed cyclic peptides. All of the MSDIN genes have conserved upstream and downstream amino acid sequences flanking a hypervariable “toxin” region of 7-10 amino acids. The presence of invariant Pro residues immediately upstream of the toxin regions, and as the last predicted amino acid in the toxin regions, suggests that initial processing of the proproteins involves proteolysis at Pro residues. We have purified from the phalloidin-producing mushroom Conocybe albipes an enzyme that can release the mature linear phalloidin peptide, AWLATCP, from a synthetic peptide by hydrolysis at the C-termini of the upstream and downstream Pro residues. Mass spectrometric analysis of the purified protein, combined with isolation and sequencing of the encoding gene, indicates that the processing enzyme is a member of the prolyl oligopeptidase (POP) subfamily of proteases (EC 3.4.21.26). Toxin-producing Amanita mushrooms have two POP genes, POPA and POPB. POPA is present throughout the genus Amanita, whereas POPB is found only in toxin-producing species.