Summary Iron (Fe) is an essential micronutrient for plants and humans, with plants being a primary dietary Fe source. Fe availability significantly affects plant health, development, and yield. Its deficiency severely inhibits plant growth; however, the mechanisms by which plants coordinate growth and Fe acquisition under Fe‐deficient conditions are not fully understood. This study uncovers a novel role of the signaling peptide PROPEP2 and its receptor PEPR2 in regulating plant growth and Fe uptake during Fe deficiency. PROPEP2 expression is strongly induced under Fe deficiency. Loss‐of‐function mutants of PROPEP2 show reduced sensitivity to Fe deficiency, indicating its key role in stress response. Exogenous application of Pep2 downregulates key iron uptake genes ( IRT1 and FRO2 ) and upregulates BTS , a negative regulator of Fe deficiency responses. Our findings reveal that PEPR2 primarily perceives Pep2 and is involved in modulating root growth under Fe‐limited conditions. The PEP2–PEPR2 module influences root architecture, rhizosphere acidification, and Fe uptake, ultimately affecting plant Fe accumulation. The PEP2–PEPR2 pathway plays a critical role in managing the trade‐off between growth and stress adaptation under Fe deficiency. This research reveals a new molecular mechanism by which plants regulate iron uptake and adapt growth under nutrient stress.