Combinatorial preparation and HTS of arrays of compounds have increased the speed of drug discovery. A strong impulse in this field has come by the introduction of the solid phase synthesis method that, through automation and miniaturization, has paved the way to the preparation of large collections of compounds in compact and trackable formats. Due to the well established synthetic procedures, peptides have been largely used to develop the basic concepts of combinatorial chemistry and peptide libraries are still successfully employed in screening programs. However, peptides generally do not fulfil the requirements of low conformational flexibility, stability and bioavailability needed for good drug candidates and peptide leads with high potency and selectivity are often made “druggable” by conversion to more stable structures with improved pharmacological profiles. Such an approach makes the screening of peptide libraries still a valuable tool for drug discovery. We propose here a panoramic review of the most common methods for the preparation and screening of peptide libraries and the most interesting findings of the last decade. We also report on a new approach we follow in our laboratory that is based on the use of “simplified” libraries composed by a minimum number of nonredundant amino acids for the assembly of short peptides. The choice of amino acids is dictated by diversity in lipophilicity, MW, charge and polarity. Newly identified active sequences are then modified by preparing new variants containing analogous amino acids, so that the chemical space occupied by the excluded residues can be explored. This approach offers the advantage of simplifying the synthesis and deconvolution of libraries and provides new active compounds with a molecular size similar to that of small molecules, to which they can be easily converted.