We have used affinity panning of libraries of bacteriophages that display random octapeptide or dodecapeptide sequences at the N-terminus of the adsorption protein (pIII) to characterize peptides that bind to the endoplasmic reticulum chaperone BiP and to develop a scoring system that predicts potential BiP-binding sequences in naturally occurring polypeptides. BiP preferentially binds peptides containing a subset of aromatic and hydrophobic amino acids in alternating positions, suggesting that peptides bind in an extended conformation, with the side chains of alternating residues pointing into a cleft on the BiP molecule. Synthetic peptides with sequences corresponding to those displayed by BiP-binding bacteriophages bind to BiP and stimulate its ATPase activity, with a half-maximal concentration in the range 10-60 microM.