Peptide libraries offer a valuable means for providing functional information regarding protein-modifying enzymes and protein interaction domains. Library approaches have become increasingly useful as high-throughput strategies for the analysis of large numbers of new proteins identified as a result of genome-sequencing efforts. Recent developments in the field have produced faster methods with broadened applicability. Crucially, new computational and biochemical tools have emerged that facilitate identification of interaction partners and substrates for proteins on the basis of their peptide selectivity profiles. Such combinations of proteomics-scale experimental approaches with bioinformatics tools hold great promise for the elucidation of protein interaction networks and signal transduction pathways in living cells.