Bioanalytical techniques that enable simple, fast and reliable high sensitivity monitoring of biomolecular interactions are of immense importance for diagnostics and drug development. This tutorial review provides an overview of recent progress in the development of peptide-based hybrid nanomaterials that transduce molecular interactions by exploiting the optical and magnetic properties of nanoparticles. Peptides have emerged as an interesting alternative to conventional biomolecular receptors, such as antibodies, and are facilitating the design of responsive hybrid nanomaterials that are both robust and sensitive for biodiagnostic applications.