Solid-phase peptide synthesis is the archetypal example of combinatorial chemistry. Advances in amino acid synthesis allow unprecedented structural diversity using automated synthesis. In this chapter we briefly introduce the history and advances in peptide synthesis and include strategies for peptidomimetic development. We highlight examples of the use of peptides in drug development, including pharmacophore extrapolation, substrate/ligand mimicry, and post-genomics target protein identification. We also describe methods for virtual combinatorial peptide construction, using databases of commercially available, non-natural amino acids, as well as strategies for high throughput virtual screening and de novo design of inhibitors. Finally, we offer suggestions for using peptide diversity for lead compound identification and optimisation, as well as a number of pitfalls in both peptide synthesis and virtual screening that need to be avoided.