The quality of food plays an important role in the prevention of disease. Functional food describes “food that can provide health benefits beyond basic nutrition.” Bioactive proteins and peptides from an important fortifying ingredient for functional food. Apart from providing nutritional benefits, they resist invasion of disease, inhibit pathophysiological pathways, and suppress pathogenic molecular activity. They also exhibit antioxidant, antihypertensive, antimicrobial, antimutagenic, anti-inflammatory, immune, and cytomodulatory and mineral-binding property. Dairy products, eggs, fish, wheat, maize, soy, rice, and mushrooms are the major sources of these functional ingredients. Fortification with bioactive proteins and peptides enhances the desirable physiological and immunological effects of the food system. Development of fully integrated bioprocesses for the large-scale manufacture and refinement of these significant biomolecules would accelerate their introduction to the main consumer markets. Therefore, effective measures are required to implement economically viable methods for the production of these functional foods on an industrial scale.