Transglutaminases catalyze transglutamination reactions on glutamines. Transglutaminases are largely exploited for modifying proteins in pharmaceutical, food, and other biotechnological applications. A library of synthetic peptides has been designed, prepared, and screened to identify new peptide substrates. The new substrates are then used in TGAse-mediated conjugation reactions to engraft synthons onto biomolecules. These peptide substrates confer the bioactive peptides and proteins with new properties. We have identified an optimized substrate named LQSP, which is recognized and processed by microbial TGAse with a strikingly higher efficiency compared to the well-known TQGA sequence. The new substrate has been used to selectively modify prototypical bioactive peptides and proteins with fluoresceine or recognition motifs. We show that, where a reactive lysine is available, proteins and peptides of relevant therapeutic interest, can be selectively and smoothly modified in order to incorporate new functions such as fluorescent labels, recognition units, or reactive groups.