Novel antimicrobial drugs are in high demand due to the increasing emergence of multi-drug resistant bacteria. In recent years, much attention has been given to natural occurring antimicrobial peptides (AMPs) such as indolicidin (ILPWKWPWWPWRR-NH2). In this study, 19 cyclic N-locked indolicidin analogues (3–21) were synthesized successfully by standard 9-fluorenylmethoxycarbonyl (Fmoc) solid-phase peptide synthesis (SPPS) combined with a convenient on-resin N-terminus to lysine side-chain cyclization via intramolecular halide substitution using bromoacetic acid. The effect of the ring size on antimicrobial activity and cytotoxicity was initially investigated and subsequently, the effect of fatty acid acylation was explored. We observed that a peptide macrocycle consisting of seven residues was optimal for Gram-positive antibacterial activity. Circular dichroism (CD) spectra of peptide macrocycles (3–13) showed that certain positions of ring-closure induced a conformation seen under sodium dodecyl sulfate (SDS) conditions where Trp side-chains can display exciton coupling. The far-UV CD was consistent with a backbone turn, a conformation with no evidence of helical structure. SAXS data on peptides mixed with lipid vesicles indicate a similar membrane interaction, when comparing the cyclic and linear indolicidin. The most potent analogue identified was 7, which showed antimicrobial activity against Gram-positive bacteria (MIC against Staphylococcus aureus ATCC29213 = 12.5 μg/mL and Staphylococcus epidermidis HJ56 = 6.3 μg/mL). In addition, viable HaCaT cells after 200 μg/mL treatment with 7 was 84.3%. The results show that N-locked cyclization of linear antimicrobial peptides provides a method to reduce cytoxicity; although it may affect the antimicrobial activity.