Carboxylated peptide‐functionalized gold nanoparticles (peptide‐GNPs) self‐assemble into two‐ and three‐dimensional nanostructures in the presence of various heavy metal ions (i.e. Pb²⁺, Cd²⁺, Cu²⁺, and Zn²⁺) in aqueous solution. The assembly process is monitored by following the changes in the surface plasmon resonance (SPR) band of gold nanoparticles in a UV/Vis spectrophotometer, which shows the development of a new SPR band in the higher‐wavelength region. The extent of assembly is dependent on the amount of metal ions present in the medium and also the time of assembly. TEM analysis clearly shows formation of two‐ and three‐dimensional nanostructures. The assembly process is completely reversible by addition of alkaline ethylenediaminetetraacetic acid (EDTA) solution. The driving force for the assembly of peptide‐GNPs is mainly metal ion/carboxylate coordination. The color and spectral changes due to this assembly can be used for detection of these heavy‐metal ions in solution.