Bicyclic peptides form one of the most promising platforms for drug development owing to their biocompatibility, similarity and chemical diversity to proteins, and they are considered as a possible practical tool in various therapeutic and diagnostic applications. Bicyclic peptides are known to have the capability of being employed as an effective alternative to complex molecules, such as antibodies, or small molecules. This review provides a summary of the recent progress on the types, synthesis and applications of bicyclic peptides. More specifically, natural and synthetic bicyclic peptides are introduced with their different production methods and relevant applications, including drug targeting, imaging and diagnosis. Their uses as antimicrobial agents, as well as the therapeutic functions of different bicyclic peptides, are also discussed.