During the past year, there have been a number of important developments that advance our understanding of the behavior of peptide fragments of proteins in aqueous solution and its relevance to the initial steps of protein folding. Extensive work, both theoretical and experimental, has been published on the characterization of secondary-structure formation in peptides, and some new techniques have emerged for its detection. Several extensive studies aimed at elucidating protein-folding initiation sites by dissecting whole proteins have been published, and the folding of a dimeric protein from peptide fragments has been demonstrated. The stabilization of transient structures in peptides has received a great deal of attention, and the role of hydrophobic interactions has been an emerging theme.