Bacteria are protected by a polymer of peptidoglycan that serves as an exoskeleton1. In Staphylococcus aureus, the peptidoglycan assembly enzymes relocate during the cell cycle from the periphery, where they are active during growth, to the division site where they build the partition between daughter cells2–4. But how peptidoglycan synthesis is regulated throughout the cell cycle is poorly understood5,6. Here, we used a transposon screen to identify a membrane protein complex that spatially regulates S. aureus peptidoglycan synthesis. This complex consists of an amidase that removes stem peptides from uncrosslinked peptidoglycan and a partner protein that controls its activity. Amidases typically hydrolyse crosslinked peptidoglycan between daughter cells so that they can separate7. However, this amidase controls cell growth. In its absence, peptidoglycan synthesis becomes spatially dysregulated, which causes cells to grow so large that cell division is defective. We show that the cell growth and division defects due to loss of this amidase can be mitigated by attenuating the polymerase activity of the major S. aureus peptidoglycan synthase. Our findings lead to a model wherein the amidase complex regulates the density of peptidoglycan assembly sites to control peptidoglycan synthase activity at a given subcellular location. Removal of stem peptides from peptidoglycan at the cell periphery promotes peptidoglycan synthase relocation to midcell during cell division. This mechanism ensures that cell expansion is properly coordinated with cell division.