PEGylation of peptide drugs prolongs their circulating lifetimes in plasma. However, PEGylation can produce a decrease in the in vitro bioactivity. Longer poly(ethylene glycol) (PEG) chains are favourable for circulating lifetimes but unfavourable for in vitro bioactivities. In order to circumvent the conflicting effects of PEG length, a hydrophobic peptide, using an antimicrobial peptide as a model, was PEGylated with short PEG chains. The PEGylated peptides self-assembled in aqueous solution into micelles with PEG shell and peptide core. In these micelles, the core peptides were protected by the shell, thus reducing proteolytic degradation. Meanwhile, most of the in vitro antimicrobial activities still remained due to the short PEG chain attached. The stabilities of the PEGylated peptides were much higher than that of the unPEGylated peptides in the presence of chymotrypsin and serum. The antimicrobial activities of the PEGylated peptides in the presence of serum, an ex vivo assay, were much higher than that of the unPEGylated peptide.