Considerable amounts of fish processing byproducts are discarded each year. By developing enzyme technologies for protein recovery and modification, production of a broad spectrum of food ingredients and industrial products may be possible. Hydrolyzed vegetable and milk proteins are widely used food ingredients. There are few hydrolyzed fish protein foods with the exception of East Asian condiments and sauces. This review describes various manufacturing techniques for fish protein hydrolysates using acid, base, endogenous enzymes, and added bacterial or digestive proteases. The chemical and biochemical characteristics of hydrolyzed fish proteins are discussed. In addition, functional properties of fish protein hydrolysates are described, including solubility, water-holding capacity, emulsification, and foam-forming ability. Possible applications of fish protein hydrolysates in food systems are provided, and comparison with other food protein hydrolysates where pertinent.