Muscle atrophy is a detrimental and injurious condition that leads to reduced skeletal muscle mass and disruption of protein metabolism. Oyster (Crassostrea nippona) is a famous and commonly consumed shellfish in East Asia and has become a popular dietary choice worldwide. The current investigation evaluated the efficacy of C. nippona against muscle atrophy, which has become a severe health issue. Mammalian skeletal muscles are primarily responsible for efficient metabolism, energy consumption, and body movements. The proteins that regulate muscle hypertrophy and atrophy are involved in muscle growth. C. nippona extracts were enzymatically hydrolyzed using alcalase (AOH), flavourzyme (FOH), and protamex (POH) to evaluate their efficacy in mitigating dexamethasone-induced muscle damage in C2C12 cells in vitro. AOH exhibited notable cell proliferative abilities, promoting dose-dependent myotube formation. These results were further solidified by protein expression analysis. Western blot and gene expression analysis via RT-qPCR demonstrated that AOH downregulated MuRF-1, Atrogin, Smad 2/3, and Foxo-3a, while upregulating myogenin, MyoD, myosin heavy chain expression, and mTOR, key components of the ubiquitin–proteasome and mTOR signaling pathways. Finally, this study suggests that AOH holds promise for alleviating dexamethasone-induced muscle atrophy in C2C12 cells in vitro, offering insights for developing functional foods targeting conditions akin to sarcopenia.