Mussel cultivation results in tons of by-product, with 27% of the harvest considered as reject material. In this study, mussel by-products considered to be undersized (mussels with a cooked meat yield <30%), mussels with broken shells and barnacle-fouled mussels were collected from three different locations in the west, north-west and south-west of Ireland. Samples were hydrolysed using controlled temperatures and agitation, and the proteolytic enzyme Protamex® was added at an enzyme:substrate ratio of 1:50 (w:v). The hydrolysates were freeze-dried and analysed for protein content and amino acid composition, lipid content and fatty acid methyl ester (FAME) composition, ash and techno-functional and bioactive activities. The degree of hydrolysis was determined using the Adler-Nissen pH stat method and was found to be between 2.41% ± 0% and 7.55 ± 0.6 %. Mussel by-products harvested between February and May 2019 had protein contents ranging from 36.76% ± 0.41% to 52.19% ± 1.78%. The protein content of mussels collected from July to October (the spawning season) ranged from 59.07% ± 1.375% to 68.31% ± 3.42%. The ratio of essential to nonessential amino acids varied from 0.68–0.96 and it was highest for a sample collected in November from the west of Ireland. All the hydrolysate samples contained omega-3 polyunsaturated fatty acids (PUFA), especially eicosapentaenoic acid (EPA) and docosahexaenoic acid (DHA), which are known anti-inflammatory agents. Selected hydrolysates which had angiotensin-converting enzyme I (ACE-I; EC 3.4.15.1) and dipeptidyl peptidase IV (DPP-IV; EC 3.4.14.5) inhibitory activities were filtered using 3-kDa membrane filtration and the permeate fraction was sequenced using mass spectrometry (MS). Identified peptides were >7 amino acids in length. Following BIOPEP database mining, 91% of the by-product mussel peptides identified were found to be previously identified DPP-IV and ACE-I inhibitory peptides, and this was confirmed using in vitro bioassays. The ACE-I inhibitory activity of the by-product mussel hydrolysates ranged from 22.23% ± 1.79% to 86.08% ± 1.59% and the most active hydrolysate had an ACE-I inhibitory concentration (IC50) value of 0.2944 mg/mL compared to the positive control, captopril. This work demonstrates that by-product mussel hydrolysates have potential for use as health-promoting ingredients.