Peptide stapling is a robust strategy for generating enzymatically stable, macrocyclic peptides. The incorporation of biologically relevant tags (such as cell‐penetrating motifs or fluorescent dyes) into peptides, while preserving their binding interactions and enhancing their stability, is highly sought after. Despite the unique opportunities offered by tryptophan‘s indole scaffold for targeted functionalisation, its utilisation in peptide stapling has been limited as compared to other amino acids. Herein, we present an approach for peptide stapling using the tryptophan‐mediated Petasis reaction. This method enables the synthesis of both stapled and labelled peptides and is applicable to both solution and solid‐phase synthesis. Importantly, the use of the Petasis reaction in combination with tryptophan facilitates the formation of stapled peptides in a straightforward, multicomponent fashion, while circumventing the formation of undesired by‐products. Furthermore, this approach allows for efficient and diverse late‐stage peptide modifications, thereby enabling rapid production of numerous conjugates for biological and medicinal applications.