Lasso peptides belong to the class of ribosomally synthesized and post‐translationally modified peptides. Their common distinguishing feature is an N‐terminal macrolactam ring that is threaded by the C‐terminal tail. This lasso fold is maintained through steric interactions. The isolation and characterization of xanthomonins I–III, the first lasso peptides featuring macrolactam rings consisting of only seven amino acids, is now presented. The crystal structure of xanthomonin I and the NMR structure of xanthomonin II were also determined. A total of 25 variants of xanthomonin II were generated to probe different aspects of the biosynthesis, stability, and fold maintenance. These mutational studies reveal the limits such a small ring imposes on the threading and show that every plug amino acid larger than serine is able to maintain a heat‐stable lasso fold in the xanthomonin II scaffold.