Since their initial discovery more than 30 years ago, tumor-homing peptides have become an increasingly useful tool for targeted delivery of therapeutic and diagnostic agents into tumors. Today, it is well accepted that cells at the tumor microenvironment (TME) contribute in many ways to cancer development and progression. Tumor-homing peptide-decorated nanomedicines can interact specifically with surface receptors expressed on cells in the TME, improve cellular uptake of nanomedicines by target cells, and impair tumor growth and progression. Moreover, peptide ligand-modified nanomedicines can potentially accumulate in the target tissue at higher concentrations than would small conjugates, thus increasing overall target tissue exposure to the therapeutic agent, enhance therapeutic efficacy and reduce side effects. This review describes the most studied peptide ligands aimed at targeting cells in the TME, discusses major obstacles and principles in the design of ligands for drug targeting and provides an overview of homing peptides in ligand-targeted nanomedicines that are currently in development for cancer therapy and diagnosis.