An efficient method for the liquid-phase combinatorial synthesis of N4-substituted 1,4-benzodiazepine-2,5-diones has been developed. Poly(ethylene glycol) (PEG) stepwise reacted with bromoacetyl bromide, a primary amine and 2-azidobenzoic acid to give a potential PEG-bound dipeptide, which was reduced by NaI / acetic acid, along with concurrent cyclization and cleavage of the seven-membered heterocycle from the PEG support.