Ultrasound was incorporated to processing of fish protein hydrolysate to facilitate homogenate pretreatment and enzymatic hydrolysis of tilapia (Oreochromis niloticus) muscle protein. Their effects on Flavourzyme hydrolysis and biological activities of the tilapia hydrolysate were examined. The ultrasound-assisted hydrolysis caused reduction in degree of hydrolysis ranging from 23% to 35% relative to that of the conventional process. The 70 W ultrasound-assisted hydrolysis process increased DPPH radical-scavenging activity and reducing power of tilapia hydrolysate prepared from the non-pretreatment homogenate by 33% and 45%, respectively. All hydrolysates have no cytotoxicity on RAW264.7 cell lines at the maximum concentration of 20 mg protein mL−1. The 70 W ultrasound pretreatment at 30 and 45 min combined with conventional hydrolysis is the suitable condition for producing tilapia hydrolysate with nitric oxide inhibitory and antioxidative activities on RAW264.7 cell lines, respectively. As a result, ultrasound could be applied to enzymatic protein hydrolysis either as pretreatment or during the hydrolysis.