Extensive effort has been devoted to the discovery, development, and validation of biomarkers for early disease diagnosis and prognosis as well as rapid evaluation of the response to therapeutic interventions. Genomic and transcriptomic profiling are well-established means to identify disease-associated biomarkers. However, analysis of disease-associated peptidomes can also identify novel peptide biomarkers or signatures that provide sensitive and specific diagnostic and prognostic information for specific malignant, chronic, and infectious diseases. Growing evidence also suggests that peptidomic changes in liquid biopsies may more effectively detect changes in disease pathophysiology than other molecular methods. Knowledge gained from peptide-based diagnostic, therapeutic, and imaging approaches has led to promising new theranostic applications that can increase their bioavailability in target tissues at reduced doses to decrease side effects and improve treatment responses. However, despite major advances, multiple factors can still affect the utility of peptidomic data. This review summarizes several remaining challenges that affect peptide biomarker discovery and their use as diagnostics, with a focus on technological advances that can improve the detection, identification, and monitoring of peptide biomarkers for personalized medicine.