Bioactive peptides are specific protein fragments that have a positive impact on body functions and conditions and may ultimately influence health. Most of the biological activities are encrypted within the primary sequence of the native protein and can be released by enzymatic hydrolysis and proteolysis or by food processing. Milk is a rich source of bioactive peptides which may contribute to regulate the nervous, gastrointestinal and cardiovascular systems as well as the immune system, confirming the added value of dairy products that, in certain cases, can be considered functional foods. The main biological activities of these peptides and their bioavailability in dairy products are reviewed. The natural concentration of these biomolecules is quite low and, to date one of the main goals has been to realize products enriched with bioactive peptides that have beneficial effects on human health and proven safety. Even though several health-enhancing products have already been launched and their integration in the diet could help in the prevention of chronic diseases such as hypertension, cancer and osteoporosis, more clinical trials are required in order to develop a deeper understanding of the activity of biopeptides on the human physiological mechanisms and also to assess the efficacy of their effects in a long term view. New scientific data are also needed to support their commercialisation in compliance with current regulations.