Protein engineering alters the polypeptide chain to obtain a novel protein with improved functional properties. This field constantly evolves with advanced in silico tools and techniques to design novel proteins and peptides. Rational incorporating mutations, unnatural amino acids, and post-translational modifications increases the applications of engineered proteins and peptides. It aids in developing drugs with maximum efficacy and minimum side effects. Currently, the engineering of peptides is gaining attention due to their high stability, binding specificity, less immunogenic, and reduced toxicity properties. Engineered peptides are potent candidates for drug development due to their high specificity and low cost of production compared with other biologics, including proteins and antibodies. Therefore, understanding the current perception of designing and engineering peptides with the help of currently available in silico tools is crucial. This review extensively studies various in silico tools available for protein engineering in the prospect of designing peptides as therapeutics, followed by in vitro aspects. Moreover, a discussion on the chemical synthesis and purification of peptides, a case study, and challenges are also incorporated.