Cryptic peptides (cryptides) are small bioactive molecules generated via degradation of functionally active proteins. Only a few examples of plant cryptides playing an important role in plant defense have been reported to date, hence our knowledge about cryptic signals hidden in protein structure remains very limited. Moreover, little is known about how stress conditions influence the size of endogenous peptide pools, and which of these peptides themselves have biological functions is currently unclear. Here, we used mass spectrometry to comprehensively analyze the endogenous peptide pools generated from functionally active proteins inside the cell and in the secretome from the model plant Physcomitrella patens. Overall, we identified approximately 4,000 intracellular and approximately 500 secreted peptides. We found that the secretome and cellular peptidomes did not show significant overlap and that respective protein precursors have very different protein degradation patterns. We showed that treatment with the plant stress hormone methyl jasmonate induced specific proteolysis of new functional proteins and the release of bioactive peptides having an antimicrobial activity and capable to elicit the expression of plant defense genes. Finally, we showed that the inhibition of protease activity during methyl jasmonate treatment decreased the secretome antimicrobial potential, suggesting an important role of peptides released from proteins in immune response. Using mass-spectrometry, in vitro experiments and bioinformatics analysis, we found that methyl jasmonate acid induces significant changes in the peptide pools and that some of the resulting peptides possess antimicrobial and regulatory activities. Moreover, our study provides a list of peptides for further study of potential plant cryptides.