Fusarium infection is a worldwide agricultural problem of billion dollar proportions globally, and it has increasingly threatened entire regional food supplies. In addition to the toxin deoxynivalenol (DON), Fusarium species express digestive enzymes that degrade starch and protein, affecting the quality of infected grains, especially wheat processing performance which depends largely on gluten proteins. In this study, the impact of Fusarium protease on the functionality of Canada Western Red Spring (CWRS) wheat was assessed by adding Fusarium-damaged kernels (FDK) to a FDK-free base wheat sample. Digestion of beta-casein by extracts of flours, milled from sound and FDK-spiked wheat samples, demonstrated elevated cleavage in FDK-spiked flour extracts as follows: N-terminal to lysine (eight-fold), N- and C-terminal to isoleucine (four-fold and three-fold, respectively), N-terminal to tyrosine (three-fold) and C-terminal to arginine at P1′ (five-fold). Comparison of abbreviated (45 min) and standard (135 min) extensigraph test results indicated that desirable increases in dough resistance to extension (Rmax) due to gluten re-polymerization after longer resting were partially to completely counteracted in FDK-spiked flours in a dose-dependent manner. Baking tests confirmed that while loaf volume is similar, proofed dough from FDK-spiked samples caused detectable loaf collapse at 3% FDK. Extensigraph Rmax and Fusarium protease levels were inversely related, and effected by both the extent and severity of infection. While the current FDK tolerances for grading Canadian wheat can effectively control protease damage, prevalence of deoxynivalenol (DON) weak- and non-producing Fusarium strains/species (e.g., F. avenaceum) in some growing regions must be considered to protect functionality if grading is solely based on DON content.