Faba beans are emerging as sustainable quality plant protein sources, with the potential to help meet the growing global demand for more nutritious and healthy foods. The faba bean, in addition to its high protein content and well-balanced amino acid profile, contains bioactive constituents with health-enhancing properties, including bioactive peptides, phenolic compounds, GABA, and L-DOPA. Faba bean peptides released after gastrointestinal digestion have shown antioxidant, antidiabetic, antihypertensive, cholesterol-lowering, and anti-inflammatory effects, indicating a strong potential for this legume crop to be used as a functional food to help face the increasing incidences of non-communicable diseases. This paper provides a comprehensive review of the current body of knowledge on the nutritional and biofunctional qualities of faba beans, with a particular focus on protein-derived bioactive peptides and how they are affected by food processing. It further covers the adverse health effects of faba beans associated with the presence of anti-nutrients and potential allergens, and it outlines research gaps and needs.