•Low-molecular-weight collagen peptides are associated with various health benefits.•Enzymatic hydrolysis remains the major way to prepare LMW collagen hydrolysates.•Cross-link and hydroxyproline in collagen contributes to its resistance to hydrolysis. Collagen hydrolysates (peptides) derived from food processing byproducts have been used to produce commercially valuable food ingredients due to their potential to trigger certain desirable physiological responses in the body. Low-molecular-weight (LMW) collagen hydrolysates are generally thought to exert better bioactivities than their larger counterparts. However, the preparation of LMW collagen hydrolysates is often impeded by their special structure, cross-linking, and hydroxyproline. This review briefly introduces the motivation of the food industry to prepare LMW collagen hydrolysate from food processing byproducts. We further summarize recent progress on the preparation of LMW collagen hydrolysates and methods to determine the molecular weight. We then discuss the challenges and then provide perspectives on future directions in preparing LMW collagen hydrolysates.