Kesari dal was pre-treated to ensure a low β-ODAP neurotoxin (≈ 0.08%) content, following which it was subjected to liquid enzymatic hydrolysis (LEH), solid state enzymatic hydrolysis (SSEH) using alcalase, modified SSEH (MSSEH) using cellulase, amylase and alcalase to produce Kesari dal liquid hydrolysate (KDLH), Kesari dal hydrolysed meal (KDHM) and modified Kesari dal hydrolysed meal (MKDHM) respectively. The hydrolysis was carried out at varying E:S ratios and time of reaction as well as moisture content in the case of SSEH and MSSEH, to yield a higher degree of hydrolysis (DH). The experimental variants of liquid hydrolysates and hydrolysed meals generated from pre-treated Kesari dal flour (KDF), were tested for various physicochemical properties and biological activities. KDLH, KDHM and MKDHM displayed improved protein solubility with a maximum solubility of 58%, 43.3% and 43.2% for the highest DH of 40.1%, 28.7%, 30.9% respectively, achieved in each process. The emulsifying properties and foaming properties of the protein hydrolysates showed a decline with increase in DH. FTIR spectra for KDHM and particularly MKDHM revealed an increase in breakage of peptide bonds, however no change in heat stability was observed under TGA analysis. KDLH, KDHM and MKDHM were subjected to in-vitro protein digestion (IVPD) and their antioxidant activity and antidiabetic activity were evaluated before and after IVPD. Hydrolysed products (KDLH, KDHM and MKDHM) displayed increased bioactivities as compared to unhydrolyzed KD (pre-treated KDF and KDLE) and further displayed either an unaltered or improved antioxidant activity as well as antidiabetic activity after IVPD.