Poly(ethylene glycol) (PEG) is a highly investigated polymer for the covalent modification of biological macromolecules and surfaces for many pharmaceutical and biotechnical applications. In the modification of biological macromolecules, peptides and proteins are of extreme importance. Reasons for PEGylation (i.e. the covalent attachment of PEG) of peptides and proteins are numerous and include shielding of antigenic and immunogenic epitopes, shielding receptor-mediated uptake by the reticuloendothelial system (RES), and preventing recognition and degradation by proteolytic enzymes. PEG conjugation also increases the apparent size of the polypeptide, thus reducing the renal filtration and altering biodistribution. An important aspect of PEGylation is the incorporation of various PEG functional groups that are used to attach the PEG to the peptide or protein. In this paper, we review PEG chemistry and methods of preparation with a particular focus on new (second-generation) PEG derivatives, reversible conjugation and PEG structures.