Large databases (>106 sequences) used in metaproteomic and proteogenomic studies present challenges in matching peptide sequences to MS/MS data using database-search programs. Most notably, strict filtering to avoid false-positive matches leads to more false negatives, thus constraining the number of peptide matches. To address this challenge, we developed a two-step method wherein matches derived from a primary search against a large database were used to create a smaller subset database. The second search was performed against a target-decoy version of this subset database merged with a host database. High confidence peptide sequence matches were then used to infer protein identities. Applying our two-step method for both metaproteomic and proteogenomic analysis resulted in twice the number of high confidence peptide sequence matches in each case, as compared to the conventional one-step method. The two-step method captured almost all of the same peptides matched by the one-step method, with a majority of the additional matches being false negatives from the one-step method. Furthermore, the two-step method improved results regardless of the database search program used. Our results show that our two-step method maximizes the peptide matching sensitivity for applications requiring large databases, especially valuable for proteogenomics and metaproteomics studies.