Described herein is the discovery of novel PSMA-specific peptides, which were identified through a novel combinatorial biopanning method. One of the novel PSMA-specific peptides discovered, GTIQPYPFSWGY (or GTI) (SEQ ID NO: 2), exhibits high binding affinity and selectivity to PSMA and PSMA-positive prostate cancer cells. It was found that GTI can mediate internalization of the apoptotic KLA peptide to PSMA-positive LNCaP cells and induce cell death. Moreover, a FAM-labeled GTI peptide shows a high and specific tumor uptake in nude mice bearing human prostate cancer xenografts. It was demonstrated that the GTI peptide can be employed as a PSMA-specific ligand for prostate cancer diagnosis and/or for targeted drug delivery to prostate cancer cells.