Abstract-Subcellular fractions of Lactobacillus bulgaricus 761N were investigated for their proteolytic activity that results in production of bioactive peptides in the cell-free supernatant. It was observed that the extracellular extract of L. bulgaricus 761N possessed the highest proteolytic activity of about 63.1 U/ml/min. Consequently, the extracellular fraction was chosen for assessing the proteolytic activity after each step of the optimization process was carried out. The factors of the optimization process involve the incubation period, temperature, pH, salinity (expressed by NaCl concentration), casein content, trace element concentration. The trace elements include cobalt chloride, copper sulphate, calcium chloride and ferrous sulphate. The basal medium used was skim milk agar. The other constituents of the chemically synthesized medium, that would optimize the proteolytic activity that in turn elevate the bioactive peptides production, are determined upon the results of the optimization process. The preferred conditions for maximal activity occurrence was after 48h incubation period, at pH 7, 37 o C, brackish environment at 5gl -1 NaCl content and 5gl -1 casein content. CaCl 2 and CoCl 2 were found to enhance the proteolytic activity at 1mM, while CuSO 4 and FeSO 4 were found to be needed in fewer amounts at 0.5mM and 0.1mM, respectively. The antibacterial activity of these bioactive peptides produced in the cell free supernatant was investigated against some human pathogenic bacteria. It was found that it impose a high antibacterial capacity on tested pathogens reaching 89% inhibition.