Take your pie dough out of the refrigerator and let it sit until it comes to room temperature.
Meanwhile, combine the diced peaches with the granulated sugar, lemon juice, and 1 teaspoon vanilla extract. Stir well and let it sit for 10 minutes.
Once your peaches have sat, drain off the juice, reserving 1 tablespoon of juice. Discard the remaining juice.
Mix the 1 tablespoon juice with the cornstarch until smooth.
Mix the cornstarch slurry back into the peaches and stir.
Preheat your air fryer to 350ºF.
Using a 5-inch plate as a template, cut a 5-inch round in the pie crust.
Continue until you run out of dough, balling it up, and rolling it out again. You will want to make 8 rounds.
Fill the center of each round with a heaping tablespoon of peaches.
Brush water around the edges of the pie crust.
Fold the dough over to form a half-circle and use a fork to crimp the edges.
Use a sharp knife to cut three small slits in the top of each hand pie.
Repeat with the remaining ingredients until you have 8 peach hand pies.
Spray the top of each pie with non-stick cooking spray.
Arrange hand pies in the air fryer so they are not touching (you might need to work in batches).
Air fry for 13-15 minutes, until golden brown.
Carefully remove the hand pies and cook any remaining pies.
While the pies are cooling, whisk together powder sugar and remaining 1/2 teaspoon vanilla extract.
Slowly whisk in the milk until a thin icing has been made.
Use a fork to drizzle the icing over the peach hand pies.
Serve and enjoy!