**1. Introduction**

A large number of food co-products is annually generated from various plantand animal-based food processing plants. The Food and Agriculture Organization (FAO) recently reported that 14% of global food production is lost prior to getting the retails [1]. There is also an estimation of generating co-products and waste of 38 percent in food processing industries [2]. These co-products are usually disposed, landfilled, incinerated and/or processed into animal feed and other low value products such as compost and fertilizer [3], which would cause economic losses and environmental concerns.

Bioactive peptide production is a promising approach to fully utilize proteinaceous co-products. These peptides could also exert physiological functions, leading to health benefits, such as antioxidant, antihypertension, antidiabetic,

immunomodulatory activities among others. But these peptides are encrypted in the protein chain and needed to be released to exert bioactivities. Fermentation, enzymatic and chemical (by acid or alkali) hydrolysis could be applied to produce bioactive peptides as well as using solvents which is normally used to extract natural peptides. Among them, enzymatic hydrolysis known to be more effective as it is a mild, ecofriendly, and controllable process. Bioactivities of the released peptides are affected by their size, hydrophobicity, charge, amino acid composition and their sequence which are different based on various enzyme and substrate as well as the hydrolysis conditions. After production of peptides with the certain bioactivity, their structural modification upon gastrointestinal digestion and epithelial transportation and absorption must be taken into consideration to determine their potential bioavailability. Several bioactivities and physiological functions of peptides derived from both animal and plant-based agricultural co-products have been reported, which are mainly focused on their antioxidant, antihypertensive, antidiabetic and antibacterial properties. In this chapter, their main biological activities along with the associated structure will be considered. Besides, the structure-bioavailability relation of the peptides will be demonstrated and procedures to keep them intact upon gastrointestinal digestion and transepithelial transportation will also be proposed.
