Peptides have some unique and superior features compared to proteins. However, the use of peptides as therapeutics is hampered by their low stability and cell selectivity. In this study, a new lytic peptide (CL-1, FLGALFRALSRLL) was constructed. Under the physiological condition, peptide CL-1 self-assembled into dynamically stable aggregates with fibrils-like structures. Aggregated CL-1 demonstrated dramatically altered activity and stability in comparison with single molecule CL-1 and other lytic peptides: when incubated with cocultured bacteria and tissue cells, CL-1 aggregates killed bacteria selectively but spared cocultured human cells; CL-1 aggregates were kept intact in human serum for more than five hours. Peptide-cell interaction studies performed on lipid monolayers and live human tissue cells revealed that in comparison with monomeric CL-1, aggregated CL-1 had decreased cell affinity and membrane insertion capability on tissue cells. A dynamic process involving aggregate dissociation and rearrangement seemed to be an essential step for membrane bound CL-1 aggregates to realize its cytotoxicity to tissue cells. Our study suggests that peptide aggregation could be as important as the charge and secondary structure of a peptide in affecting peptide-cell interactions. Controlling peptide self-assembly represents a new way to increase the stability and cell selectivity of bioactive peptides for wide biomedical applications.