PEPSI is a high-resolution, fiber fed echelle spectrograph with polarimetric capabilities for the LBT. In order to reach a maximum resolution R=120.000 in polarimetric mode and 300.000 in integral light mode with high efficiency in the spectral range 390-1050~nm, we designed a white-pupil configuration with Maksutov collimators. Light is dispersed by an R4 31.6 lines/mm monolithic echelle grating mosaic and split into two arms through dichroics. The two arms, optimized for the spectral range 390-550~nm and 550-1050~nm, respectively, consist of Maksutov transfer collimators, VPH-grism cross dispersers, optimized dioptric cameras and 7.5K x 7.5K 8~μ CCDs. Fibers of different core sizes coupled to different image-slicers allow a high throughput, comparable to that of direct feed instruments. The optical configuration with only spherical and cylindrical surfaces, except for one aspherical surface in each camera, reduces costs and guarantees high optical quality. PEPSI is under construction at AIP with first light expected in 2006.