Agro-industrial by-products containing considerable amounts of protein (10–50%) such as soybean meal, rice bran and coconut pulp are promising bioactive peptide sources with annual disposal rate of 800 million tons in the world. More recently, plant by-products rich in protein content have been studied under various prisms that include recovery techniques, peptide production methods, determination of technological benefits and functional properties, and their applications in foods. The researches in bioactive peptides provide evidence over the techno-functional properties and the health benefits are highly dependent upon their amino acid sequences, molecular weights, conformations and surface properties. Research findings compared bioactive properties of the obtained peptides with respect to their amino acid sequences and also reported that hydrophobic/hydrophilic properties have direct effect on both functional and health effects. In addition, the resultant properties of the peptides could be affected by the conducted extraction method (alkaline, enzymatic, ultrasound assisted, microwave assisted, etc.), extraction solvent, precipitation and purification techniques and even by the final drying process (spray, freeze, vacuum, etc.) which may alter molecular weights, conformations and surface properties. Latest studies have investigated solubility, emulsifying, foaming, water/oil holding capacity and surface properties and also antioxidant, antimicrobial, anticarcinogenic, hypocholesterolemic, antihypertensive, immunomodulatory and opioid activities of bioactive peptides obtained from plant by-products. Moreover, the application of the bioactive peptides into different food formulations has been a recent trend of functional food development. These bioactive peptides’ bitter taste and toxicity are possible challenges in some cases that need to be resolved before their wider utilization.