Multibillion-clone libraries of phages displaying guest peptides fused to the major coat protein pVIII (landscape libraries) are a rich source of probes for proteinaceous and non-proteinaceous targets. As opposed to the pIII-type fusion phages, which display peptides as independent structural domains, the guest peptides in the pVIII-fusion phages can be structurally and functionally influenced by contiguous subunits. To decipher the impact of the locale of a guest peptide on its affinity characteristics, we constructed a library of phages carrying beta-galactosidase-binding peptide ADTFAKSMQ at the N-terminus of the pVIII protein surrounded by random amino acids. It was found that mutagenesis of amino acids 12-19 (domain C) has polar effects on target binding affinity of the displayed peptide. The phages with highest affinity are characterized by: (i) a net electrostatic charge around -1 of domain C of the mutated phages at pH 7.0; (ii) a lower radius of cylinder coaxial to alpha-helix formed by domain C; (iii) a lower higher occupied molecular orbital (HOMO) of domain C leading to a decreased formation of hydrogen bonds and (iv) positively charged surface and torsion energy of domain C, which may require a conformational transition of N-terminal peptide ADTFAKSMQ for its binding with beta-galactosidase. Influence of the guest peptide on the diversity of mutations in the neighboring landscape area was also observed.