A pollock protein hydrolysate was used for enrichment of the live feed offered to halibut larvae from the onset of exogenous feeding and the effects of treatment on selected innate immune parameters studied. The effects of treatment on the bacterial community structure of larvae were furthermore studied using the PCR-DGGE method. C3 and lysozyme were identified in larvae already at the onset of first feeding and low concentrations of IgM detected at this stage indicate maternal origin. Endogenous production of IgM was validated in the gastrointestinal tract of larvae from 29 days post onset of first feeding, with similar concentrations found in both groups. Feeding the peptide-enriched live feed stimulated production of lysozyme and affected the distribution of C3 in larval tissue but survival and normal development of halibut larvae were not affected by the treatment. Vibrio sp. and Pseudoalteromonas sp. dominated the bacterial community of larvae from both groups and peptide enrichment of the live feed was not found to affect the bacterial community structure associated with surface sterilized larvae.