Flammulina velutipes protein hydrolysates are known for their abundant amino acids and excellent developmental values. This study aimed to identify and screen neuroprotective peptides from F. velutipes protein hydrolysates in vitro and validate the protective effects of YVYAETY on memory impairment in scopolamine-induced mice. The F. velutipes protein was hydrolyzed by simulated gastrointestinal digestion, followed by purification through ultrafiltration and gel chromatography. The fraction exhibiting the strongest neuroprotective activity was analyzed by liquid chromatography-tandem mass spectrometry (LC-MS/MS). The main identified peptides (SDLKPADF, WNDHYY, YVYAETY, and WFHPLF) effectively mitigated excessive ROS production by increasing SOD and GSH-px activities while inhibiting cell apoptosis and mitochondrial membrane potential (MMP) collapse against oxidative stress in Aβ25-35-induced HT22 cells. By molecular docking, the interaction between peptides and the active site of the Keap1-Kelch domain reveals their capacity to regulate the Keap1/Nrf2/HO-1 pathway. In vitro, the peptide YVYAETY had the best effect and can be further validated in vivo. The behavioral tests showed that YVYAETY improved scopolamine-induced cognitive impairment in mice. YVYAETY also alleviated neuron damage including neuron vacuolation and pyknotic nuclei in the hippocampus. Furthermore, it significantly inhibited oxidative stress and suppressed the activation of the Nrf2 pathway. Therefore, this study revealed that YVYAETY had the potential to serve as a novel neuroprotective agent.