An allergy to cow’s milk requires the avoidance of cow’s milk proteins and, in some infants, the use of a hypoallergenic formula. This review aims to summarize the current evidence concerning different types of hydrolysed formulas (HF), and recommendations for the treatment of IgE- and non-IgE-mediated cow’s milk allergy and functional gastrointestinal disorders in infancy, for which some dietary intervention and HF may be of benefit to both immune and motor mechanisms. Current guidelines recommend cow’s milk protein (i.e., whey or casein) extensively hydrolysed formula (eHF) as the first choice for cow’s milk allergy treatment, and amino acid formulas for more severe cases or those with reactions to eHF. Rice hydrolysed formulas (rHF) have also become available in recent years. Both eHF and rHF are well tolerated by the majority of children allergic to cow’s milk, with no concerns regarding body growth or adverse effects. Some hydrolysates may have a pro-active effect in modulating the immune system due to the presence of small peptides and additional components, like biotics. Despite encouraging results on tolerance acquisition, evidence is still not conclusive, thus hampering our ability to draw firm conclusions. In clinical practice, the choice of hypoallergenic formula should be based on the infant’s age, the severity, frequency and persistence of symptoms, immune phenotype, growth pattern, formula cost, and in vivo proof of tolerance and efficacy.