Sea cucumber is a precious and nutritious food with abundant protein and other bioactive compounds, among which sea cucumber peptide (SCP) exhibits many beneficial functions. Although research on the development of SCP is attracting more attention, the ability to translate these new findings into industrial practice and new products remains immature. This review summarizes the production and characterization of SCP and emphasizes recent advances in its bioactive properties, including antioxidative, angiotensin‐I converting enzyme‐inhibitory, immunomodulatory, anticancer, antifatigue, and neuroprotective effects. Meanwhile, the challenges and prospects of SCP development have been discussed in both scientific research and commercialization. SCP shows great potential in health promotion, yet several challenges need to be solved: the validation of health claims, clarification of its mechanisms, innovations to boost its bioavailability, and improvement of industrial production and sensory properties of end‐products. Hopefully, this information will provide a comprehensive perspective on developing SCP nutraceuticals and functional foods.
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