Cordyceps militaris 202 is a potential fungus for biotransformation zein, due to its various proteases, high tolerance and viability in nature. In this article, single factor experiment and response surface methodology were applied to optimize the liquid fermentation conditions and improve the ability of biotransformation zein. The optimized fermentation conditions were as follows: inoculum concentration of 19%, volume of liquor of 130 mL/500 mL and pH of 4.7. Under this condition, the degree of hydrolysis (DH) was 27.31%. The zein hydrolysates from fungi fermentation maintained a high thermal stability. Compared to the original zein, the zein hydrolysates were found to have high solubility, which most likely results in improved foaming and emulsifying properties. Overall, this research demonstrates that hydrolysis of zein by C. militaris 202 is a potential method for improving the functional properties of zein, and the zein hydrolysates can be used as functional ingredients with an increased antioxidant effect in both food and non-food applications.