The study evaluated the effect of an ultrasound-assisted treatment on the structural and functional properties of sheep bone collagen (SBC). The type and distribution of SBC were analyzed by proteome (shotgun) technology combined with liquid chromatography-tandem mass spectrometry. Compared with pepsin extraction, the ultrasound-assisted treatment significantly increased the collagen extraction rate by 17.4 pp (P < 0.05). The characteristic functional groups and structural integrity of collagen extracted by both methods were determined via Fourier transform infrared spectroscopy, ultraviolet absorption spectroscopy, and fluorescence spectroscopy. Circular dichroism spectra revealed that the ultrasound-assisted pretreatment reduced α-helix content by 1.6 pp, β-sheet content by 21.9 pp, and random coils content by 28.4 pp, whereas it increased β-turn content by 51.9 pp (P < 0.05), compared with pepsin extraction. Moreover, ultrasound-assisted treatment collagen had superior functional properties (e.g., solubility, water absorption, and oil absorption capacity) and foaming and emulsion properties, compared with pepsin extraction. Furthermore, the relative content of type I collagen in ultrasound-assisted extracted SBC was highest at 79.66%; only small proportions of type II, VI, X, and XI collagen were present. Peptide activity analysis showed that SBC had potential antioxidant activity, dipeptidyl peptidase 4 inhibitory activity, and angiotensin-converting enzyme inhibitory activity; it also had anticancer, antihypertensive, anti-inflammatory, and immunomodulatory effects.