Delipidated egg yolk protein (EYP) is produced as a co-product of egg yolk lecithin extraction. This EYP is expected to have poor functionality because of protein denaturation caused by ethanol treatment during lecithin extraction. Two food grade endo-proteases were used to produce EYP hydrolysates (EYPh) with two degrees of hydrolysis (DH), 3% and 6%. Protein solubility was improved as DH increased. Solubility profiles for both EYP and EYPh were relatively less pH-dependent compared with soy protein. Except for foaming capacity, EYPh showed improvement in foam stability, foaming speed, and foam density. Emulsion stability was improved for all EYPhs. Treatments at DH of 6% showed significant increase in emulsification capacity. We have shown quantitatively how controlled enzymatic hydrolysis can be applied to ethanol-treated lipid-free EYP to increase protein solubility, and thus to improve foaming and emulsification properties.