This study systematically investigated the effects of a low-intensity magnetic field on the influence of keratinase activity, peptide yield, and structural and functional properties of peptides produced during solid-state fermentation (SSF) of mixed organic substrates (chicken feather powder and okara) using a mutant strain of Bacillus licheniformis. Initially, the magnetic field-assisted SSF (MSSF) conditions were optimized, which provided the optimized conditions as the number of treatments 3 at every 24 h (24, 48, and 72 h) with 4 h holding time at 120 Gs of magnetic intensity (mI). Under the optimum conditions, keratinase activity and peptide production increased by 10.31% and 13.77%, respectively. Further, in order to evaluate the influence of magnetic field treatment on the peptides, MSSF experiments were done under different mI conditions (40, 80, 120, and 160 Gs), followed by the evaluation of the structural changes of the extracted peptides. The structural analysis revealed that mI had a significant impact on the keratin surface. In contrast, secondary structure analysis confirmed the unfolding of the peptide with decreased α-keratin and increased β-keratin, thereby boosting the bioactive properties of the peptides. The highest hydroxyl free radical (.OH), 1,1-diphenyl-2-picrylhydrazyl (DPPH) scavenging and Fe2+ chelating rates (56.55, 71.36, and 50.72%, respectively) were found at 120 Gs, which were insignificant with the results at 160 Gs. Therefore, MSSF has a positive effect on the proteolysis mechanism, which can increase bioactive peptide production from keratin.