The quest for novel functional food ingredients from natural sources is one of the most important discuss in food science and technology. Food industries dispose their valuable waste and some food industries re-process their wastes and used them as functional food ingredients, thereby developed their economy to survive in the neck cutting competition of the market. Enormous volumes of food processing by-products (FPBs) are produced from food manufacturing industries, accounting it as the second-largest quota of food waste generation. Fish known as ‘rich food for poor people,’ supplies good quality of fats, minerals vitamins and proteins to billions of populaces across the globe. However, the fish processing industry on daily basis generates huge wastes leading to the quest for management of these wastes. These wastes which can be referred to as by-products are generated during removal of head; gutting of the fish and during other secondary processing carried out either onboard in fishing vessels or at processing plants on the shores. Over the years there are bids for utilization of fish wastes and by products for production of functional food ingredients using bioactive compounds produced from them. This was aimed at reduction of processing waste, creation of sustainable economic boost, environmental safety while formulating value added functional food which could be of importance to human and animal health or wellbeing. By-products from fish processing such as blood, fleshy chunks of fatty fish, tails, liver from white lean fish, Fish heads, offal, viscera (gut, intestines, etc.), skin and shells have potentials utilization as raw materials for production of value-added functional food ingredients. Bioactive peptides isolated from various fish protein hydrolysates have reported to have several bioactivities such as immunomodulatory, antioxidative antihypertensive, antithrombotic, anticoagulant activities among others Hence from the review, the recovery of bioactive compound and utilization of these by-products are untapped sources for functional ingredients which can be applied in several aspects of food processing for the benefit of manufactures, supply series of nourishments, and consequently advancing the usefulness of the fish waste in consumers’ health and economic benefits of all stakeholders.