The "one-bead one-compound" (OBOC) combinatorial library method is highly efficient, especially when used with well-established on-bead binding or functional assays. Literally, millions of compounds can be screened concurrently within 1 to 2 days. However, structure determination of peptidomimetic and small molecule compounds on one single bead is not trivial. A novel, highly efficient, and robust peptide-based encoding system has been developed for OBOC peptidomimetic and small molecule combinatorial libraries. In this system, topologically segregated bifunctional beads, which are made by a simple biphasic solvent strategy, are employed for the preparation and screening of an OBOC combinatorial peptidomimetic and small molecule libraries. Testing molecules are on the outer layer, and the coding tags in the interior of the bead do not interfere with screening. The coding tag is a peptide containing a large number of unnatural alpha-amino acids derived from different building blocks used for generating the peptidomimetic or small molecule. By coupling common building blocks simultaneously to the scaffold of the testing compound and to the side chains of the alpha-amino acids on the coding peptide, extra synthetic steps are eliminated and the amount of undesirable side products is minimized. Positive bead decoding is easy and straightforward as there is no need for cleavage and retrieval of the coding tag, and positive beads can be sequenced directly with Edman degradation. To demonstrate the efficiency and simplicity of our encoding system, an encoded 158 400-member model peptidomimetic library has been generated and screened for ligands that bind to streptavidin. Potent and novel ligands with clear motifs have been identified.