Bioactive peptides are a class of peptides with special physiological functions and have potential applications in human health and disease prevention. Bioactive peptides have gained much research attention because they affect the cardiovascular, endocrine, immune, and nervous systems. Recent research has reported that bioactive peptides are of great value for physiological function regulation, including antioxidation, anti-hypertension, antithrombosis, antibacterial properties, anti-cancer, anti-inflammation, anti-diabetic, anti-obesity, cholesterol-lowering, immunoregulation, mineral binding and opioid activities. The production of food-derived bioactive peptides is mainly through the hydrolysis of digestive enzymes and proteolytic enzymes or microbial fermentation. The purpose of this review is to introduce the production, function, application, challenges, and prospects of food-derived bioactive peptides.