Bacterial degradation of toxic microcystins produced by cyanobacteria is a common phenomenon. However, our understanding of the mechanisms of these processes is rudimentary. In this paper several novel discoveries regarding the action of the enzymes of the mlr cluster responsible for microcystin biodegradation are presented using recombinant proteins. In particular, the predicted active sites of the recombinant MlrB and MlrC were analyzed using functional enzymes and their inactive muteins. A new degradation intermediate, a hexapeptide derived from linearized microcystins by MlrC, was discovered. Furthermore, the involvement of MlrA and MlrB in further degradation of the hexapeptides was confirmed and a corrected biochemical pathway of microcystin biodegradation has been proposed.