Bacillus species have attracted significant attention in recent years due to their potential for producing various bioactive compounds with diverse functional properties. This review highlights bioactive substances from food-grade Bacillus strains and their applications in functional foods and nutraceuticals. The metabolic capacities of Bacillus species have allowed them to generate a wide range of bioactive substances, including vitamins, enzymes, anti-microbial peptides, and other non-ribosomal peptides. These substances have a variety of positive effects, including potential cholesterol-lowering and immune-modulatory qualities in addition to anti-oxidant and anti-bacterial actions. The uses and mechanisms of action of these bioactive chemicals can be used to improve the functional qualities and nutritional profile of food products. Examples include the use of anti-microbial peptides to increase safety and shelf life, as well as the use of Bacillus-derived enzymes in food processing to improve digestibility and sensory qualities. The exploitation of bioactive compounds from food-grade Bacillus strains presents a promising frontier in the development of functional foods and nutraceuticals with enhanced health benefits. Due to their wide range of activity and applications, they are considered as important resources for the development of novel medications, agricultural biocontrol agents, and industrial enzymes. Ongoing research into the biosynthetic pathways, functional properties, and applications of these compounds is essential to fully realize their potential in the food industry. This review underscores the significance of various bioactive compounds generated from Bacillus in tackling global issues like environmental sustainability, sustainable agriculture, and antibiotic resistance. Future developments in microbiology and biotechnology will enable us to fully utilize the potential of these amazing microbes, resulting in novel approaches to industry, agriculture, and health. © 2024 Society of Chemical Industry.