Bacteria release membrane vesicles (MVs) that play important roles in various biological processes. However, the mechanisms of MV formation in Gram-positive bacteria are unclear, as these cells possess a single cytoplasmic membrane that is surrounded by a thick cell wall. Here we use live cell imaging and electron cryo-tomography to describe a mechanism for MV formation in Bacillus subtilis. We show that the expression of a prophage-encoded endolysin in a sub-population of cells generates holes in the peptidoglycan cell wall. Through these openings, cytoplasmic membrane material protrudes into the extracellular space and is released as MVs. Due to the loss of membrane integrity, the induced cells eventually die. The vesicle-producing cells induce MV formation in neighboring cells by the enzymatic action of the released endolysin. Our results support the idea that endolysins may be important for MV formation in bacteria, and this mechanism may potentially be useful for the production of MVs for applications in biomedicine and nanotechnology.It is unclear how Gram-positive bacteria, with a thick cell wall, can release membrane vesicles. Here, Toyofuku et al. show that a prophage-encoded endolysin can generate holes in the cell wall through which cytoplasmic membrane material protrudes and is released as vesicles.