We report a biocompatible and rapid reaction between cysteine thiols and 2,4-difluoro-6-hydroxy-1,3,5-benzenetricarbonitrile (DFB), which enables the efficient cyclization of peptides in neutral aqueous solutions. The reaction was further applied to cyclize peptides displayed on the phage surface without reducing phage infectivity, thus affording high-quality cyclic peptide libraries useful for screening of cyclic peptide ligands. Using the DFB-cyclic peptide library, we identified ligands that can distinguish the pro-survival protein Bcl-xl from its close relative Bcl-2. Therefore, this study on one hand reports a useful reaction for the construction of cyclic peptide libraries, and on the other hand presents valuable hits for further design of selective Bcl-xl ligands.