Peptides, short-chained amino acids, have shown great potentials toward the investigation and evolution of novel medications for treatment or therapy. The wet-lab based discovery of potential therapeutic peptides and eventually drug development is a hard and time-consuming process. The computational prediction using machine learning (ML) methods can expedite and facilitate the discovery process of potential prospects with therapeutic effects. ML approaches have been practiced favorably and extensively within the area of proteins, DNA, and RNA to discover the hidden features and functional activities, moreover, recently been utilized for functional discovery of peptides for various therapeutics. In this paper, a systematic literature review (SLR) has been presented to recognize the data-sources, ML classifiers, and encoding schemes being utilized in the state-of-the-art computational models to predict therapeutic peptides. To conduct the SLR, fourty-one research articles have been selected carefully based on well-defined selection criteria. To the best of our knowledge, there is no such SLR available that provides a comprehensive review in this domain. In this article, we have proposed a taxonomy based on identified feature encodings, which may offer relational understandings to researchers. Similarly, the framework model for the computational prediction of the therapeutic peptides has been introduced to characterize the best practices and levels involved in the development of peptide prediction models. Lastly, common issues and challenges have been discussed to facilitate the researchers with encouraging future directions in the field of computational prediction of therapeutic peptides.