Abstract A batch mode, pilot-scale process, involving ultrasound pretreatment (USP), enzymolysis, membrane filtration and drying was investigated for the production of angiotensin converting enzyme (ACE) inhibitory and antioxidative peptides from milk protein concentrate (MPC). The MPC solutions (2% or 5% protein) were hydrolyzed for 2h with Neutrase at enzyme-to-substrate ratio of 1:50 (w/w) in 50L batches after USP for 4min at 800W. Ultrafiltration (8 and 3.5kDa membranes) and nanofiltration (0.2kDa membrane) were done to produce 4 fractions (F1, >8kDa; F2, 3.5–8kDa; F3, 0.2–3.5kDa; and F4, <0.2kDa). Analyses showed that large amounts of ACE inhibitory peptides were recovered by the 3.5kDa membrane and concentrated by nanofiltration making F3 ideal for ACE inhibition (IC50=0.096±0.010mgmL−1) while antioxidative peptides were abundant in F2 with bioactivity not affected by drying method. Initial substrate concentration had no significant effect (P<0.05) on bioactivity. Furthermore, permeation fluxes were high when a low protein concentration was used. Ultrafiltration achieved peptide rejections rates in the range of 24.0–33.7% and reached 89.6% during nanofiltration. The results indicate that membrane filtration can separate ACE inhibitory and antioxidative peptides in complex protein hydrolysates.