The beneficial effects of food-derived antioxidants in health promotion and disease prevention are being increasingly recognized. Recently, there has been a particular focus on milk-derived peptides; as a source of antioxidants, these peptides are inactive within the sequence of the parent protein but can be released during enzyme hydrolysis. Once released, the peptides have been shown to possess radical scavenging, metal ion chelation properties and the ability to inhibit lipid peroxidation. A variety of methods have been used to evaluate in vitro antioxidant activity, however, there is no standardised methodology, which hinders comparison of data. This review provides an overview on the generation of antioxidative peptides from milk proteins, the proposed mechanisms of protein/peptide induced antioxidant activity, in vitro measurement of antioxidant activity, in vivo evaluation of plasma antioxidant capacity and the bioavailability of antioxidative peptides. The understanding gained from other food proteins is referred to where specific data on milk-derived peptides are limited. The potential applications and health benefits of antioxidant peptides are discussed with a particular focus on the aging population. The regulatory requirements for peptide-based antioxidant functional foods are also considered.