Peptide-cyclodextrin and protein-cyclodextrin host-guest complexes are becoming more and more important for industrial applications, in particular in the fields of pharmaceutical and food chemistry. They have already deserved many experimental investigations although the effect of complex formation in terms of peptide (or protein) structure is not well-known yet. Theoretical calculations represent a unique tool to analyze such effects, and with this aim we have carried out in the present investigation molecular dynamics simulations and combined quantum mechanics-molecular mechanics calculations. We have studied complexes formed between the model Ace-Phe-Nme peptide and the beta-cyclodextrin (beta-CD) macromolecule, and our analysis focuses on the following points: (1) how is the peptide structure modified in going from bulk water to CD environment (backbone torsion angles), (2) which are the main peptide-CD interactions, in particular in terms of hydrogen bonds, (3) which relative peptide-CD orientation is preferred and which are the structural and energetic differences between them, and (4) how the electronic properties of the peptide changes under complex formation. Overall, our calculations show that in the most stable configuration, the backbone chain lies in the narrow rim of the CD. Strong hydrogen bonds form between the H atoms of the peptidic NH groups and oxygen atoms of the secondary OH groups in the CD. These and other (weaker) hydrogen bonds formed by the carbonyl groups reduce considerably the flexibility of the peptide structure, compared to bulk water, and produce a marked increase of the local dipole moment by favoring configurations in which the two C=O bonds point toward the same direction. This effect might have important consequences in terms of the peptide secondary structure, although this hypothesis needs to be tested using larger peptide models.