Region-specific local landraces represent a germplasm diversity adapted and acclimatized to local conditions, and are ideal to breed for targeted market niches while maintaining the variability of heirloom traits. A collection of 180 pepper accessions, collected from 62 diverse locations across six Balkan countries, were characterized and evaluated for phenotypic and biochemical variation during a multi-year environment. An assortment of 32 agro-morphological, fruit quality, and virus resistance traits were evaluated, and the top 10% accessions were identified. A wide range of trait variation concerning plant architecture, inflorescence and fruit traits, yield and fruit quality was observed, and appreciable variation was noticed. According to hierarchical clustering, six distinct clusters were established based on pre-defined varietal groups. Divergence among accessions for phenotypic and fruit compositional variability was analyzed, and eight principal components were identified that contributed ~71% of the variation, with fruit shape, width, wall thickness, weight, and fruit quality traits being the most discriminant. Evaluation of the response to tobacco mosaic virus (TMV) and pepper mild mottle mosaic virus (PMMoV) showed that 24 and 1 accession were resistant, respectively while no tomato spotted wilt virus (TSWV) resistance was found. Considerable diversity for agro-bio-morphological traits indicates the Balkan pepper collection as good gene sources for pre-breeding and cultivar development that are locally adapted.