Increasing amounts of data demonstrate a bioactive role of proteins and peptides above and beyond their nutritional impact. The focus of the investigations has mainly been on vitamin- and mineral-binding proteins, on antimicrobial, immunosuppressing/-modulatory proteins, and on proteins with enzyme inhibitory activity as well as on hormones and growth factors from different food proteins; most research has been performed on milk proteins. Because of their molecular size, intact absorption of proteins in the human gastrointestinal tract is limited. Therefore, most of the proteins with biological functions show physiological activity in the gastrointestinal tract by enhancing nutrient absorption, inhibiting enzymes, and modulating the immune system to defend against pathogens. Peptides are released during fermentation or digestion from food proteins by proteolytic enzymes; such peptides have been found mainly in milk. Some of these released peptides exert biological activities such as opiate-like, antihypertensive, mineral-binding, antioxidative, antimicrobial, immuno-, and cytomodulating activity. Intact absorption of these smaller peptides is more likely than that of the larger proteins. Consequently, other organs than the gastrointestinal tract are possible targets for their biological functions. Bioactive proteins as well as bioactive peptides are part of a balanced diet. It is possible to accumulate bioactive peptides in food, for example by using specific microorganisms in fermented dairy products. Although bioactive peptides have been the subject of several studies in vitro and in vivo, their health potential is still under investigation. Up to now, the Commission of European Communities has not (yet) authorized any health claims for bioactive proteins and peptides from food.