Methanobactins (Mbns) are a family of copper-binding peptides involved in copper uptake by methanotrophs, and are potential therapeutic agents for treating diseases characterized by disordered copper accumulation. Mbns are produced via modification of MbnA precursor peptides at cysteine residues catalyzed by the core biosynthetic machinery containing MbnB, an iron-dependent enzyme, and MbnC. However, mechanistic details underlying the catalysis of the MbnBC holoenzyme remain unclear. Here, we present crystal structures of MbnABC complexes from two distinct species, revealing that the leader peptide of the substrate MbnA binds MbnC for recruitment of the MbnBC holoenzyme, while the core peptide of MbnA resides in the catalytic cavity created by the MbnB–MbnC interaction which harbors a unique tri-iron cluster. Ligation of the substrate sulfhydryl group to the tri-iron center achieves a dioxygen-dependent reaction for oxazolone-thioamide installation. Structural analysis of the MbnABC complexes together with functional investigation of MbnB variants identified a conserved catalytic aspartate residue as a general base required for MbnBC-mediated MbnA modification. Together, our study reveals the similar architecture and function of MbnBC complexes from different species, demonstrating an evolutionarily conserved catalytic mechanism of the MbnBC holoenzymes.