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Developing peptide-based drugs are very promising to address many of the lifestyle mediated diseases which are prevalent in a major portion of the global population. As an alternative to synthetic peptide-based drugs, derived peptides from natural sources have gained a greater attention in the last two decades. Aquatic organisms including plants, fish and shellfish are known as a rich reservoir of parent protein molecules which can offer novel sequences of amino acids in peptides, having unique bio-functional properties upon hydrolyzing with proteases from different sources. However, rather than exploiting fish and shellfish stocks which are already under pressure due to overexploitation, the processing discards, regarded as secondary raw material, could be a potential choice for peptide based therapeutic development strategies. In this connection, we have attempted to review the scientific reports in this area of research that deal with some of the well-established bioactive properties, such as antihypertensive, anti-oxidative, anti-coagulative, antibacterial and anticarcinogenic properties, with reference to the type of enzymes, substrate used, degree of particular bio-functionality, mechanism, and wherever possible, the active amino acid sequences in peptides. Many of the studies have been conducted on hydrolysate (crude mixture of peptides) enriched with low molecular bioactive peptides. In vitro and in vivo experiments on the potency of bioactive peptides to modulate the human physiological functions beneficially have demonstrated that these peptides can be used in the prevention and treatment of non-communicable lifestyle mediated diseases. The information synthesized under this review could serve as a point of reference to drive further research on and development of functionally active therapeutic natural peptides. Availability of such scientific information is expected to open up new zones of investigation for adding value to underutilized secondary raw materials, which in turn paves the way for sustainability in fish processing. However, there are significant challenges ahead in exploring the fish waste as a source of bioactive peptides, as it demands more studies on mechanisms and structure-function relationship understanding as well as clearance from regulatory and statutory bodies before reaching the end user in the form of supplement or therapeutics.