Synthetic oligopeptides with a tryptophan residue at the C‐terminus have been used for the synthesis of gold and silver nanoparticles at pH 11. The tryptophan residue in the peptides is responsible for the reduction of metal ions to the respective metals, possibly through electron transfer. A mechanistic pathway has been proposed to explain the reductive properties of the tryptophan moiety of the peptide based on some spectroscopic techniques, such as UV‐visible and fluorescence spectroscopy. This study reveals that some of the peptide molecules are converted to its corresponding ditryptophan, kynurenine form and some cross‐linked products, all of which are highly fluorescent species. The resultant peptide‐functionalized metal nanoparticles have also been characterized by UV‐visible spectroscopy, transmission electron microscopy, and Fourier transform IR spectroscopy and thermogravimatric analysis.