Food‐derived bioactive peptides (BAPs) are recently utilized as functional food raw materials owing to their potential health benefits. Although there is a huge amount of scientific research about BAPs’ identification, purification, characterization, and physiological functions, and subsequently, many BAPs have been marketed, there is a paucity of review on the regulatory requirements, bioavailability, and safety of BAPs. Thus, this review focuses on the toxic peptides that could arise from their primary proteins throughout protein extraction, protein pretreatment, and BAPs’ formulation. Also, the influences of BAPs’ length and administration dosage on safety are summarized. Lastly, the challenges and possibilities in BAPs’ bioavailability and regulatory requirements in different countries were also presented. Results revealed that the human studies of BAPs are essential for approvals as healthy food and to prevent the consumers from misinformation and false promises. The BAPs that escape the gastrointestinal tract epithelium and move to the stomach are considered good peptides and get circulated into the blood using different pathways. In addition, the hydrophobicity, net charge, molecular size, length, amino acids composition/sequences, and structural characteristics of BAPs are critical for bioavailability, and appropriate food‐grade carriers can enhance it. The abovementioned features are also vital to optimize the solubility, water holding capacity, emulsifying ability, and foaming property of BAPs in food products. In the case of safety, the possible allergenic and toxic peptides often exhibit physiological functions and could be produced during the hydrolysis of food proteins. It was also noted that the production of iso‐peptides bonds and undesirable Maillard reaction might occur during protein extraction, sample pretreatments, and peptide synthesis.