Covalent lipid modification of proteins anchors hydrophilic proteins/peptides to hydrophobic surfaces and aid efficient performance in aqueous conditions as required in many biotechnological applications like ELISA, biosensors, targeted-drug delivery and liposomal integration. Lipid modification studied by him in bacteria extended the possibility of in vitro lipid modification, particularly for peptides. In this thesis the first enzyme of the pathway, phosphatidylglycerol:prolipoprotein diacylglyceryl transferase (Lgt), which catalyzes the bulk of the lipidation has been utilized in devising a small bioreactor prototype for in vitro peptide modification. To achieve this, a new generic synthetic peptide assay was designed and used for its kinetic characterization and enrichment. The packed bed reactor with continuous and total feed-back operation in batch mode converted 65% of the model hydrophilic peptide substrate to lipopeptide. The higher conversion rate achieved in this study demonstrated the feasibility of such a bioreactor for lipid modification of a variety of peptides for potential biotech applications.