This paper presents an analysis of phage-displayed libraries of peptides using Illumina. We describe steps for the preparation of the short DNA fragments for deep sequencing and MatLab software for the analysis of the results. Screening of peptide libraries displayed on the surface of bacteriophage (phage display) can be used to discover peptides that bind to any target. The key step in this discovery is the analysis of peptide sequences present in the library. This analysis is usually performed by Sanger sequencing, which is labor intensive and limited to examination of a few hundred phage clones. On the other hand, Illumina deep-sequencing technology can characterize over 10 7 reads in a single run. We applied Illumina sequencing to analyze phage libraries. Using PCR, we isolated variable regions from a M13KE phage vector. The PCR primers contained (i) sequences flanking the variable region, (ii) barcodes, and (iii) variable 5'-terminal region. We used this approach to examine how diversity of peptides in phage display libraries changes as a result of amplification of libraries in bacteria. Using HiSeq single-end Illumina sequencing of these fragments, we acquired over 2x10 7 reads, 57 base pairs (bp) in length. Each read contained information about the barcode (6 bp), one complimentary region (12 bp) and a variable region (36 bp). We applied this sequencing to a model library of 10 6 unique clones and observed that amplification enriches ~150 clones, which dominate ~20% of the library. Deep sequencing, for the first time, characterized the collapse of diversity in phage libraries. The results suggest that screens based on repeated amplification and small-scale sequencing identify a few binding clones and miss thousands of useful clones. The deep sequencing approach described here could identify under-represented clones in phage screens. It could also be instrumental in developing new screening strategies, which can preserve diversity of phage clones and identify ligands previously lost in phage display screens.