In a medium skillet over medium-high heat, saute sweet pepper, and onion in oil until crisp-tender, about 5 minutes. Add garlic and saute one additional minute. Remove from heat and set aside.
In a small bowl, whisk soy sauce, vinegar, peanut butter, sugar, and cornstarch-water mixture until smooth. Return vegetable mixture to medium-high heat and add soy sauce mixture.
Bring to a low simmer over medium-high heat, stirring occasionally until sauce is bubbly and thickened. Reduce heat to medium and add cooked pad thai noodles, stirring occasionally until noodles are heated through and coated with sauce.
Remove noodles from heat and stir in basil and chopped peanuts. Season with salt and pepper to taste. Serve hot and enjoy!