Two hydrolysates were obtained from dried Mastocarpus stellatus using alcalase. The phenolic content was partially removed from one of them. The phenolic-partially-removed hydrolysate (H) was found to be a potent angiotensin-I converting enzyme (ACE) inhibitor. However, the phenolic-containing hydrolysate (Hp) showed a higher Folin-reactive substance content and antioxidant capacity (reducing power and radical scavenging capacity). Hp was therefore selected for the development of antioxidant Mastocarpus carrageenan-based films. F-Hp0 (without the hydrolysate), F-Hp15 (with 15% hydrolysate) and F-Hp30 (with 30% hydrolysate) films were developed. κ/ι-hybrid carrageenan was the main film constituent and hydrolysate addition resulted in an increased sulfated proportion, higher protein content and higher number of hydrogen bonds. Therefore interactions between carrageenan helices, plasticizers and peptides in the film-forming solution were enhanced, especially in F-Hp15, and consequently the water vapour permeability (WVP) of the resulting film decreased. Nevertheless, F-Hp30 considerably improved the transparency, UV/Vis light barrier, water resistance and elongation at break (EAB). The presence of Hp increased both puncture force (F) and puncture elongation (E), but not tensile strength (TS) or Young's modulus (Y). The addition of an increased concentration of hydrolysate to the films led to a considerable increase in the Folin-reactive substance content and the antioxidant activity, especially the radical scavenging capacity.