Background/Objectives: Type 2 diabetes (T2D) has become a critical global health issue, with an increasing prevalence that contributes to significant morbidity and mortality. Inhibiting dipeptidyl peptidase-IV (DPP4) is a promising strategy for managing T2D. This study aimed to explore the DPP4 inhibitory peptide derived from bitter melon seed protein (BMSP) hydrolysate. Methods: Reversed-phase high-performance liquid chromatography (RP-HPLC) was utilized to fractionate the hydrolysate. Peptide in the highest activity fraction was analyzed using liquid chromatography-mass spectrometry (LC-MS/MS). Peptide synthetic was used for further characterizations, such as bioactivity exploration, inhibition mechanism, molecular docking, and peptide stability against in vitro simulated gastrointestinal (SGI) digestion. Results: The BMSP hydrolysate was digested with gastrointestinal proteases (GP) and assessed for DPP4 inhibitory activity, yielding an IC50 of 1448 ± 105 μg/mL. Following RP-HPLC fractionation, MPHW (MW4) and VPSGAPF (VF7) were identified from fraction F8 with DPP4 IC50 values of 128.0 ± 1.3 µM and 150.6 ± 3.4 µM, respectively. Additionally, MW4 exhibited potential antihypertensive effects through ACE inhibition with an IC50 of 172.2 ± 10.6 µM. The inhibitory kinetics and molecular docking simulations indicated that both MW4 and VF7 were competitive inhibitors of DPP4, while MW4 was also a competitive inhibitor of ACE. Importantly, both peptides remained stable during simulated gastrointestinal digestion, suggesting their resistance to human digestive processes and their capacity to maintain biological activity. Conclusions: The findings suggest that BMSP-GP hydrolysate may have potential in terms of the development of health foods or therapeutic agents. However, in vivo studies are also essential for further confirmation of efficacy.