We report the use of a sulfonated biarylphosphine ligand (sSPhos) to promote the chemoselective modification of cysteine containing proteins and peptides with palladium reagents in aqueous medium. The use of sSPhos allowed for the isolation of several air-stable and water-soluble mono- and bis-palladium reagents, which were used in an improved protocol for the rapid S-arylation of cysteines under benign and physiologically relevant conditions. The cosolvent-free aqueous conditions were applied to the conjugation of a variety of biomolecules with affinity tags, heterocycles, fluorophores, and functional handles. Additionally, bis-palladium reagents were used to perform macrocyclization of peptides bearing two cysteine residues.