Identifying materials contributing to skin hydration, essential for normal skin homeostasis, has recently gained increased research interest. In this study, we investigated the potential benefits and mechanisms of action of Aspergillus oryzae-fermented wheat peptone (AFWP) on the proliferation and hydration of human skin keratinocytes, through in vitro experiments using HaCaT cell lines. The findings revealed that compared to unfermented wheat peptone, AFWP exhibited an improved amino acid composition, significantly (p < 0.05) higher DPPH scavenging capability and cell proliferation activity, and reduced lipopolysaccharide-induced NO production in RAW 264.7 cells. Furthermore, we separated AFWP into eleven fractions, each ≤2 kDa; of these, fraction 4 (AFW4) demonstrated the highest efficacy in the cell proliferation assay and was found to be the key component responsible for the cell proliferation potential and antioxidant properties of AFWP. Additionally, AFW4 increased the expression of genes encoding natural moisturizing factors, including filaggrin, transglutaminase-1, and hyaluronic acid synthase 1–3. Furthermore, AFW4 activated p44/42 MAPK, but not JNK and p38 MAPK, whereas PD98059, a p44/42 MAPK inhibitor, attenuated the beneficial effects of AFW4 on the skin, suggesting that the effects of AFW4 are mediated via p44/42 MAPK activation. Finally, in clinical studies, AFW4 treatment resulted in increased skin hydration and reduced trans-epidermal water loss compared with a placebo group. Collectively, these data provide evidence that AFW4 could be used as a potential therapeutic agent to improve skin barrier damage induced by external stresses.