In this critical review we highlight recent advances in the use of peptide- and protein-related materials as smart building blocks in nanotechnology. Peptides and proteins can be very practical for new material synthesis and device fabrications. For example, peptides and proteins have superior specificity for target binding as seen in the antibody recognition and this biological recognition function can be used to assemble them into specific structures and shapes in large scale, as observed in the S-layer protein assembly. Collagens are assembled from triple helix peptides in micron-size with precise recognition between peptides and these biological assemblies can undergo smart structural change with pH, ionic strength, temperature, electric/magnetic fields. In addition, assemblies of peptides can template complex 3D crystallization processes with catalytic function, thus enabling to grow various materials in physiological conditions at low temperature in aqueous solution. The biomimetic growth of nanomaterials in aqueous solution is extremely useful when they are applied to therapeutics and medical imaging in vivo since these nanomaterials will be well dispersed in bodies. Peptides also play significant roles in signal transduction pathways in cells. For example, neuropeptides are used as neurotransmitters between synapses and these peptides bind receptors on the surface of cells to cascade the signal transduction. These versatile functions of peptides are extremely practical and here we discuss them with examples of relevant applications such as nanoreactors, sensors, electronics, and stimulus-responsive materials. It should be noted that peptide/protein assemblies can be applied to build up micron-scale materials that still feature excellent nano-scale ensembles, which essentially bridges the nano-world and the micro-world (86 references).