One of the largest family of cell surface proteins, G-protein coupled receptors (GPCRs) regulate virtually all known physiological processes in mammals. With seven transmembrane segments, they respond to diverse range of extracellular stimuli and represent a major class of drug targets. Peptidergic GPCRs use endogenous peptides as ligands. To understand the mechanism of GPCR activation and rational drug design, knowledge of threedimensional structure of receptor-ligand complex is important. The endogenous peptide hormones are often short, flexible and completely disordered in aqueous solution. According to ''Membrane Compartments Theory'', the flexible peptide binds to the membrane in the first step before it recognizes its receptor and the membrane-induced conformation is postulated to bind to the receptor in the second step. Structures of several peptide hormones have been determined in membrane-mimetic medium. In these studies, micelles, reverse micelles and bicelles have been used to mimic the cell membrane environment. Recently, conformations of two peptide hormones have also been studied in receptor-bound form. Membrane environment induces stable secondary structures in flexible peptide ligands and membrane-induced peptide structures have been correlated with their bioactivity. Results of site-directed mutagenesis, spectroscopy and other experimental studies along with the conformations determined in membrane medium have been used to interpret the role of individual residues in the peptide ligand. Structural differences of membrane-bound peptides that belong to the same family but differ in selectivity are likely to explain the mechanism of receptor selectivity and specificity of the ligands. Knowledge of peptide 3D structures in membrane environment has potential applications in rational drug design.