Sea-food processing wastes and underutilized species of fish are a potential source of functional and bioactive compounds. A large number of bioactive substances can be produced through enzyme-mediated hydrolysis. Suitable enzymes and the appropriate bioreactor system are needed to incubate the waste materials. Membrane separation is a useful technique to extract, concentrate, separate or fractionate the compounds. The use of membrane bioreactors to integrate a reaction vessel with a membrane separation unit is emerging as a beneficial method for producing bioactive materials such as peptides, chitooligosaccharides and polyunsaturated fatty acids from diverse seafood-related wastes. These bioactive compounds from membrane bioreactor technology show diverse biological activities such as antihypertensive, antimicrobial, antitumor, anticoagulant, antioxidant and radical scavenging properties. This review discusses the application of membrane bioreactor technology for the production of value-added functional materials from sea-food processing wastes and their biological activities in relation to health benefits.