Functional properties, antioxidant and Angiotensin-converting enzyme (ACE) inhibitory activities of peanut protein isolate (PPI) and peanut protein hydrolysate (PPH) prepared using Alcalase, at different (10%, 20%, 30% and 40%) degrees of hydrolysis, (DH) were investigated. Hydrolysis (at DH > 10%) significantly ( p < 0.05) improved the solubility (>80%) of PPI, especially in the pH range of 4–6. However, PPI showed better emulsifying and foaming properties than PPH ( p < 0.05). As DH increased, ferrous ion chelating activity, 1,1-diphenyl-2-picrylhydrazyl (DPPH) radical-scavenging activity and ACE inhibitory activity of PPH increased, while reducing power decreased ( p < 0.05). Bleaching of beta-carotene by linoleic acid was suppressed better by PPI and PPH at 10% DH than of PPH at higher DH. Thus, the results reveal that DH affects functional properties, antioxidant and ACE inhibitory activities of peanut protein.