Peptides have become an indispensable tool in engineering of multifunctional nanostructure platforms for biomedical applications such as targeted drug and gene delivery, imaging and biosensing. They can be covalently incorporated into a variety of nanoparticles (NPs) including polymers, metallic nanoparticles, and others. Using different bioconjugation techniques, multifunctional peptide‐modified NPs can be formulated to produce therapeutical and diagnostic platforms offering high specificity, lower toxicity, biocompatibility, and stimuli responsive behavior. Targeting peptides can direct the nanoparticles into specific tissues for targeted drug and gene delivery and imaging applications due to their specificity towards certain receptors. Furthermore, due to their stimuli‐responsive features, they can offer controlled release of therapeutics into desired sites of disease. In addition, peptide‐based biosensors and imaging agents can provide non‐invasive detection and monitoring of diseases including cancer, infectious diseases, and neurological disorders. In this review, we covered the design and formulation of recent peptide‐based NP platforms, as well as their utilization in in vitro and in vivo applications such as targeted drug and gene delivery, targeting, sensing, and imaging applications. In the end, we provided the future outlook to design new peptide conjugated nanomaterials for biomedical applications.