Lantibiotics are a diverse group of heavily modified antimicrobial and/or signalling peptides produced by a wide range of bacteria, including a variety of lactic acid bacteria. Based on their diverse structures and mode of action, at least six separate lantibiotic subgroups can be suggested, but all subgroups are characterized by significant post-translational modifications, which include the formation of (beta-methyl)lanthionines, among other unusual alterations. These small peptides are produced, modified, exported, sensed and combated by a complex set of proteins encoded by (usually) co-ordinately regulated operons. In some instances, the production and immunity have been shown to be auto-regulated by the mature lantibiotic. Since their discovery, interest in lantibiotics has been fuelled by their obvious potential as food-grade antimicrobials to improve food safety and quality; a potential which, to date, has been realised only by the longest characterised molecule, nisin. In addition, these peptides are often mooted as alternatives to antibiotics for some biomedical applications. The purpose of this paper is to review recent developments in our understanding of lantibiotic structure, molecular genetics and applications for this unusual class of bacteriocins.