A novel method for peptide bond formation utilizing amino acid 2-formyl-4-nitrophenylthio ester has been developed. The reaction can be performed in water-containing media and is compatible with various types of amino acid side-chain functional groups. Use of N-methylmaleinimide as an additive is essential for the reaction to proceed with high efficiency. It captures liberated formyl-substituted thiophenol through 1,4-addition followed by aldol cyclization.