Combinatorial phage peptide libraries have been used to identify the ligands for specific target molecules. These libraries are also useful for identification of the specific substrates of various proteases. A “substrate phage library” has a random peptide sequence at the N-terminus of the phage coat protein and an additional tag sequence that enables attachment of the phage to an immobile phase. When these libraries are incubated with a specific enzyme, such as a protease, the uncleaved phage is excluded from the solution with tag-binding macromolecules. This provides a novel approach to define substrate specificity. The aim of this review is to summarize recent progress on the application of the substrate phage technique to identify specific substrates of proteolytic enzymes. As an example, some of our own experimental data on the selection and characterization of substrate sequences for thrombin, a serine protease, and membrane type-1 matrix metalloproteinase (MT1-MMP) will be presented. Using this approach, the canonical consensus substrate sequence for thrombin was deduced from the selected clones. As expected from the collagenolytic activity of MT1-MMP, a collagen-like sequence was identified in the case of MT1- MMP. A more selective substrate sequence for MT1-MMP was identified during a substrate phage screen. The delineation of the substrate specificity of proteases will help to elucidate the enzymatic properties and the physiological roles of these enzymes. Comprehensive screening of very large numbers of potential substrate sequences is possible with substrate phage libraries. Thus, this approach allows novel substrate sequences and previously unknown target molecules to be defined.