Milk is a major source of dietary energy, protein and fat. Due to their specific biological properties leading to health benefits, bioactive peptides (BAPs) derived from milk proteins have been a subject of intensive research during past two decades. These peptide sequences, encrypted within proteins, are liberated in vivo during gastrointestinal digestion or in vitro by fermentation with proteolytic starter cultures or using proteases. BAP generally comprises 2-20 amino acid (AA) residues. Isolation and characterization of BAP of different bioactivities from milk protein hydrolysates of cow, buffalo, camel, goat, mare, sheep, donkey and yak milks have been reported. Bioactivities of BAP, which depend on constituent AAs and the sequence, include mineral binding, opioid, angiotensin-converting enzyme (ACE) inhibition, immunomodulatory, cytotoxicity, antibacterial and antithrombotic. This chapter focuses on the methodologies adopted to produce BAPs and their prospective role in health enhancing nutraceuticals/pharmaceuticals.