A uniform hydrolysate with a relatively low free amino acid content (<5%) was produced from bovine casein with a commercial protease (Alcalase) in a two-stage membrane reactor. The trichloroacetic acid-soluble nitrogen was 98.68% and degree of hydrolysis was 23.2% for the second-stage hydrolysate. The retained immunologically active casein was 2.32% and whey protein was 1.09% in the hydrolysate as determined by ELISA. The second-stage protein hydrolysate was completely soluble at 2% (w/v) from pH 3.0 to 9.0. Water sorption increased two to four times at water activities of 0.33 to 0.95 as compared to untreated casein.