To identify milk-derived peptides with both antioxidant and calcium absorption activities in combating osteoporosis, we employed a comprehensive screening approach that included virtual enzymatic hydrolysis, molecular docking, and cellular experiments using osteoblasts. Under the optimal conditions for dual-enzyme hydrolysis, the 1,1-diphenyl-2-trinitrophenylhydrazine (DPPH) radical scavenging rate and soluble calcium binding capacity of the milk-derived peptides were 19.69% and 0.6965 μg/mL, respectively. Six peptide segments, namely KEDVPSER, HKEMPFPK, YPSYG, EDVPSE, VPQLE, and IPAVF, were identified through UPLC-Q-Exactive Orbitrap MS and molecular docking for further validation. Among the peptides, YPSYG significantly promoted the proliferation of MC3T3-E1 cells both with and without CaCl2 (P < 0.05), increasing proliferation by 38.27% and 20.67%, respectively, compared to the control group. Additionally, YPSYG significantly improved proliferation after H2O2-induced oxidative damage (P < 0.05), with a 38.23% higher rate than the model group. Compared with rats in the osteoporosis model group, YPSYG significantly enhanced serum alkaline phosphatase (ALP) and N-terminal propeptide of type I procollagen in rats (s-PINP) levels and decreased tartrate-resistant acid phosphatase (TRAP) levels (P < 0.05). Furthermore, milk-derived peptides and YPSYG significantly increased the bone weight index, maximum load, and bending energy of the femur and tibia in osteoporotic rats (P < 0.05). Additionally, these peptides significantly reduced the number of osteoclasts in the metaphysis of the femur and tibia in osteoporotic rats and alleviated microstructural damage. This study confirmed that milk-derived peptides, including YPSYG, effectively promoted bone formation and improved bone microstructure in osteoporotic rats. These findings provided a foundation for developing functional foods for elderly bone health.