Site-specific modification of peptides and proteins has wide applications in probing and perturbing biological systems. Herein we report that 1,2-aminothiol can react rapidly, specifically and efficiently with 2-((alkylthio)(aryl)methylene)malononitrile (TAMM) under biocompatible conditions. This reaction undergoes a unique mechanism involving thiol-vinyl sulfide exchange, cyclization, and elimination of dicyanomethanide to form 2-aryl-4,5-dihydrothiazole (ADT) as a stable product. An 1,2-aminothiol functionality can be introduced into a peptide or a protein as an N-terminal cysteine or an unnatural amino acid. The bioorthogonality of this reaction was demonstrated by site-specific labeling of not only synthetic peptides and a purified recombinant protein but also proteins on mammalian cells and phages. Unlike other reagents in bioorthogonal reactions, the chemical and physical properties of TAMM can be easily tuned. TAMM can also be applied to generate phage-based ADT-cyclic peptide libraries without reducing phage infectivity. Using this approach, we identified ADT-cyclic peptides with high affinity to different protein targets, providing valuable tools for biological studies and potential therapeutics. Furthermore, the mild reaction conditions of TAMM condensation warrant its use with other bioorthogonal reactions to simultaneously achieve multiple site-specific modifications.