Peptones are among the most expensive culture components used in the cultivation of microorganisms. This study was performed to prepare a protein hydrolysate from sheep wool using a locally isolated keratinolytic bacterium Bacillus licheniformis EY2 (GenBank: MN809476), and to investigate the usability of the prepared hydrolysate as a peptone in a microbial medium. The optimum pH, temperature, and incubation time for wool hydrolysis and keratinolytic activity were determined as 7.0, 55 °C, and 6 days, respectively. Optimum concentrations of KH2PO4, MgSO4, and NaCl were determined as 1.5, 0.5, and 2 g/L, respectively. After the prepared hydrolysate was partially purified, it was converted to wool peptone (WP). The total protein, ash, carbohydrate, and lipid content of WP was found to be 82.7, 7.2, 0.1, and 0.2 g/100 g, respectively. Fourier transform infrared (FTIR) analysis of WP confirmed the formation of sulfoxide bonds (S=O), which indicated the breaking of disulfide bonds. When compared with commercial tryptone peptone (TP), WP was found to be superior for the cell growth performances of Esherichia coli, Bacillus subtilis, Staphylococcus aureus, Lactobacillus plantarum, Pediococcus pentosaceus, Candia albicans and Aspergillus niger. A protein hydrolysate (including wool protein hydrolysate) prepared via microbial hydrolysis was tested for the first time as a peptone source. The cost of WP is much lower than commercial peptones. At the same time, the method developed offers an environmentally friendly approach for the reduction of the amount of unutilized or waste sheep wool. © 2021 Society of Industrial Chemistry and John Wiley & Sons Ltd.