Protein degradation occurs during the processing of dry‐cured ham, which has important influences on the flavor and quality of products. The aim of this work was to study the degradation kinetics of myofibrillar proteins (MPs) and sarcoplasmic proteins (SPs) extracted from the biceps femoris muscle during the processing of Xuan'en ham. A relationship between protein degradation and the flavor formation was found. During the processing of Xuan'en ham, MPs and SPs were mainly degraded in the salting stage and incipient fermentation. Accompanied by protein degradation, the content of carbonyl group in SPs increased gradually, but in MPs, it first increased and then decreased. Interconversion between sulfhydryl and disulfide bonds was investigated during this processing. Oxidation, degradation, and thermal effects significantly affected the surface hydrophobicity of proteins. More than one hundred volatile compounds have been identified at each stage of ham preparation. Among them, organic acids were the predominant group, followed by hydrocarbons, aldehydes, alcohols, ketones, and esters.