Ligands selected from phage-displayed random peptide libraries tend to be directed to biologically relevant sites on the surface of the target protein. Consequently, peptides derived from library screenings often modulate the target protein's activity in vitro and in vivo and can be used as lead compounds in drug design and as alternatives to antibodies for target validation in both genomics and drug discovery. This review discusses the use of phage display to identify membrane receptor modulators with agonistic or antagonistic activities. Because isolating or producing recombinant membrane proteins for use as target molecules in library screening is often impossible, innovative selection strategies such as panning against whole cells or tissues, recombinant receptor ectodomains, or neutralizing antibodies to endogenous binding partners were devised. Prominent examples from a two-decade history of peptide phage display will be presented, focusing on the design of affinity selection experiments, methods for improving the initial hits, and applications of the identified peptides.