Lasso peptides are a class of ribosomally synthesized and post-translationally modified peptides (RiPPs) that feature a unique lariat-knot topology. Canucin A, a post-translationally hydroxylated lasso peptide, was recently discovered activation of its otherwise silent biosynthetic gene cluster in . The biosynthesis of canucin A, notably the introduction of a hydroxyl group at the β-carbon of the terminal aspartate residue, is the topic of the current report. We combine genetic and biochemical experiments to show that an iron/2-oxoglutarate-dependent enzyme, CanE, installs the hydroxyl group onto the precursor peptide and . Moreover, we show that hydroxylation occurs prior to macrocyclization and that the RiPP recognition element (RRE), encoded within the gene cluster to facilitate the initial proteolytic reaction, also increases the yield of hydroxylation, hinting at a dual role for the RRE. Our results have implications for the combinatorial biosynthesis of lasso peptides.