Fish protein hydrolysates (FPH) were used in a feeding trial with juvenile African catfish Clarias gariepinus, to determine their effects on growth and feed utilisation, and impact on non-specific immune function and body composition, at varying dietary inclusion levels. Fish processing by-products were enzymatically hydrolysed to a degree of hydrolysis of 16%, and included at 4 dietary levels: 10 g kg−1, 19 g kg−1, 28 g kg−1 and 38 g kg−1 dry matter, respectively substituting 5%, 10%, 15% and 20% of dietary fish meal. The FPH had high protein content (763 g kg−1 on dry weight basis), of which a high proportion consisted of essential amino acids (417 g kg−1 protein). Feeding trial results indicated that all diets supported high specific growth rates of 4.72–5.09% day−1, and final animal weight, weight gain, specific growth rate, feed conversion ratio, and animal condition factor were unaffected by dietary FPH inclusion. Apparent dry matter digestibility was also not affected by FPH inclusion. Inclusion of 19 g kg−1 FPH resulted in higher (P < 0.05) serum immunoglobulin levels compared to the control, while total protein and lysozyme levels remained unaffected. FPH also affected body composition, resulting in lower (P < 0.05) moisture for all FPH treatments compared to the control, and higher (P < 0.05) lipid levels except at 28 g kg−1 inclusion. In conclusion, the FPH represents a nutritious feed ingredient which can be utilised in juvenile African catfish diets up to 38 g kg−1 inclusion without affecting growth, feed utilisation or condition factor. The FPH exhibited bioactivity through significantly enhanced immunoglobulin levels at an intermediate inclusion level of 19 g kg−1. The work demonstrates that FPH can have a dual effect when included in aquaculture diets, as it can act as nutritious feed ingredient effectively replacing a portion of dietary fish meal, while simultaneously improving components of the non-specific immune function. The work is further relevant in that it clearly demonstrates the possibility of utilising by-products not destined for fish meal production, for production of aquaculture feed ingredients. It therefore contributes to sustainable utilisation of natural resources, and the improvement of aquaculture feeding practices.