With the rapid development of the new power system, the bilateral uncertainty of source and load is increasing, posing greater challenges to grid peak regulation. Consequently, there is an urgent need to aggregate demand-side flexible resources through the virtual power plant (VPP) approach to enhance grid regulation capabilities and ensure the safe and stable operation of the grid. First, based on the typical rules of the domestic peak regulation auxiliary services market, the overall architecture of the VPP system is clarified, and the specific business process for VPP participation in the peak regulation auxiliary services market is proposed. Secondly, focusing on the technical challenges faced by VPPs at this stage, the key technologies for VPP participation in the peak regulation auxiliary services market are discussed in three aspects: load forecasting, cooperative regulation, and proxy packages. Using Ningxia VPP’s participation in grid peak regulation as an example, it is verified that under the proposed system architecture and technical route, VPP operators and proxy users can achieve normalized profitability. Finally, future research directions and development suggestions for large-scale VPP participation in the peak regulation auxiliary services market are proposed.