Class B G-protein-coupled receptors are a small family of 15 peptide-binding receptors. This family includes at least six biologically attractive therapeutic targets for both peptide ligands (osteoporosis and Type II diabetes) and nonpeptide ligands (anxiety, depression and migraine). A general mechanism of peptide binding has emerged for this receptor family, termed the two-domain model. In this mechanism, the C-terminal ligand region binds the extracellular N-terminal domain of the receptor. This interaction acts as an affinity trap, promoting interaction of the N-terminal ligand region with the juxtamembrane domain of the receptor. Peptide binding to the juxtamembrane domain activates the receptor and stimulates intracellular signaling. Nonpeptide ligands bind the juxtamembrane or N-terminal domain and, in most cases, allosterically modulate peptide-ligand binding. Here, these mechanisms of peptide and nonpeptide ligand binding are reviewed, then applied in a discussion of the future strategies of drug development for Class B G-protein-coupled receptors.