Peanut is an important crop grown worldwide. Commercially it is used mainly for oil production but apart from oil, the by-products of peanut contains many other functional compounds like proteins, fibers, polyphenols, antioxidants, vitamins and minerals which can be added as a functional ingredient into many processed foods. Recently it has also revealed that peanuts are excellent source of compounds like resveratrol, phenolic acids, flavonoids and phytosterols and also many important fatty acids like PUFA and MUFA that block the absorption of cholesterol from diet. It is also a good source of Co-enzyme Q10 and contains all the 20 amino acids with highest amount of arginine. These bio-active compounds have been recognized for having disease preventive properties and are thought to promote longevity. The processing methods like roasting and boiling have shown increase in the concentration of these bio-active compounds. So use of peanut butter in daily diet instead of vegetable fatgives more nutrition value.