Bioactive biomaterials are desirable as tissue engineering scaffolds by virtue of their capability to mimic the natural environment of the extracellular matrix. Bioactive biomaterials have been achieved by incorporating synthetic short peptide sequences into suitable materials either by surface modification or by bulk incorporation. The goal is to enhance cell attachment and other basic functions. Bioactive peptides can be obtained from biological or chemically synthesized sources, increasing their specific cellular responses for tissue growth and development. Compared to using an entire growth factor in regenerative therapy, these peptides demonstrate potential advantages such as overcoming possible immunogenicity, being less susceptible to degradation, and producing fewer tumor-related side effects. Biomaterial scaffolds modified with peptides can provide biological ligands for cell-scaffold interactions that promote cell attachment, proliferation, and differentiation. Peptide-based biomaterial scaffolds can be fabricated to form two- and three-dimensional structures. This review discusses cell-binding, biominerailization inducing peptides, and receptor-binding peptides for bone regeneration. This review also addresses issues related to peptide immobilization as well as potential complications that may develop as a result of using these versatile bioactive peptides. The development of self-assembled peptide amphiphiles with the goal of generating new three-dimensional scaffolds for tissue engineering is also summarized.