Many bioactivities of milk are latent in that they are inactive within the protein sequence, requiring enzymatic proteolysis for release of bioactive peptides from milk proteins precursors. Bioactivities of peptides encrypted in major milk proteins are latent until released and activated, e.g. during gastrointestinal digestion or food processing. Bioactive peptides can be produced in vivo following intake of milk proteins, and the proteolytic system of bacterial species used in the production of fermented milk products and cheese can contribute to the liberation of bioactive peptides or precursors thereof. Activated peptides are potential modulators of various regulatory processes in the living system: immunomodulatory peptides stimulate the activities of cells of the immune system and several cytomodulatory peptides inhibit cancer cell growth, antimicrobial peptides kill sensitive microorganisms, angiotensin-I-converting enzyme (ACE)-inhibitory peptides exert an hypotensive effect, opioid peptides are opioid receptor ligands which can modulate absorption processes in the intestinal tract, mineral binding peptides may function as carriers for different minerals, especially calcium. Many milk-derived peptides reveal multifunctional properties, i.e. specific peptide sequences having two or more different biological activities have been reported. Milk protein-derived bioactive peptides are claimed to be health enhancing components that can be used to reduce the risk of disease or to enhance a certain physiological function.