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Consumption of soy protein and its products has increased significantly due to the increasing costs of animal proteins, esoteric supplement requirements, and several functional health benefits. Recently, the need to upgrade the functional features of soy protein led to new technologies including chemical and enzymatic processes. Hypoallergenic formulas and other immunomodulatory products are crucial targets of enzyme technology. Several proteases are used to achieve varying physiological properties and degrees of hydrolysis of soy protein, but reports on the use of pepsin are few, whereas it is among the paramount digestive proteases in the gastrointestinal tract of man. Bitterness and digestibility of soy protein hydrolysates have always been of concern, and there are ways of evading them. This review examines the potentials of pepsin-educed soy protein hydrolysates in relation to immunomodulatory and functional food products.