Phage display has advanced the discovery of peptides that selectively bind to a wide variety of cell surface molecules, offering new modalities to modulate disease-related protein–protein interactions (PPIs). These cell-binding peptides occupy a unique pharmaceutical space between small molecules and large biologics, and their growing popularity has opened up new avenues for targeting cell surface proteins that were previously considered undruggable. This work provides an overview of methods for identifying cell-selective peptides using phage display combinatorial libraries, covering in vitro, ex vivo, and in vivo biopanning approaches. It addresses key considerations in library design, including the peptide conformation (linear vs. cyclic) and length, and highlights examples of clinically approved peptides developed through phage display. It also discusses the on-phage chemical cyclization of peptides to overcome the limitations of genetically encoded disulfide bridges and emphasizes advances in combining next-generation sequencing (NGS) with phage display to improve peptide selection and analysis workflows. Furthermore, due to the often suboptimal binding affinity of peptides identified in phage display selections, this article discusses affinity maturation techniques, including random mutagenesis and rational design through structure–activity relationship (SAR) studies to optimize initial peptide candidates. By integrating these developments, this review outlines practical strategies and future directions for harnessing phage display in targeting challenging cell surface proteins