A majority of kinase inhibitors predominantly occupy the highly conserved adenine-binding pocket located in the kinase catalytic cleft, and therefore the target selectivity of these molecules is a major concern. In order to design highly specific next-generation drugs, it is essential to exploit the less-conserved binding pockets, which lie adjacent to the adenine-binding pocket. Small peptides that can function as adenosine triphosphate (ATP) competitive inhibitors would prove useful in identifying and validating new druggable surfaces in the kinase catalytic cleft. These peptides, being larger than small molecules, have the potential to target the ATP binding pocket as well as surfaces that lie adjacent to this pocket. Such peptides recognizing novel binding pockets can assist the drug discovery process in several ways. In this thesis, we describe the isolation and characterization of a novel class of cyclic peptides, referred to as lariats, against Abl kinase, a drug target important in chronic myeloid leukemia and other disorders. Using a yeast two-hybrid approach, we first isolated two related lariats, named A1 and A2, from a pool of five million lariats, which interact with the catalytic domain of Abl kinase. In vitro studies indicated that the synthetic A1 lariat competitively inhibits ATP binding by targeting the catalytic cleft that lies between the N- and C- lobes of the kinase catalytic domain. To obtain tighter-binding variants of the A1 lariat, we developed an affinity maturation protocol consisting of two steps. In the first step, we defined acceptable and tolerable substitutions at each position of the A1 lariat using site-saturation mutagenesis (SSM). In the second step, we designed specific mutations to the A1 lariat based on the SSM results and evolved higher affinity variants. Synthetic and recombinant higher affinity lariats exhibited a strong inhibition of Abl kinase activity in vitro and Bcr-Abl kinase activity in vivo, respectively, illustrating the potential of lariats as chemical genetic tools. Resistance mutation profiling showed that the lariats are not affected by the activating mutations located in the activation loop of kinase, and instead bind preferentially to the kinase active conformation. Selectivity analysis indicated that the lariats do not recognize Src family kinases, which share a high structural similarity with Abl kinase in their active conformation. These findings, coupled with preliminary results from modeling studies, strongly suggest that the lariats have identified novel allosteric drug-binding pockets in the kinase catalytic cleft.