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Application of bioactive peptides (BAPs) is promising due to their potential antimicrobial, antioxidant, agonistic, and ACE inhibition properties. To achieve a stable and active peptide at relatively high pH and temperatures by microbial fermentation, a wide variety of microorganisms need to be explored from diverse habitats, and compost is the excellent source. In an attempt to isolate potent protease-producing bacteria, gelatin-supplemented DM agar medium was used. Out of 140 pure cultures, initial protease production selects isolate D3L/1 (26 U/mL), and 16S rDNA sequencing confirmed it as <i>Bacillus subtilis</i>. Protease production was increased to 55.55 U/mL, with pH 7.5, 1% glucose, 1% casein, 1% ammonium sulfate, for 96 h of fermentation, at 37 °C under 140 rpm of shaking. Ion-exchange, and size-exclusion chromatography, 30 KDa protease was purified up to 4.1-fold (specific activity 3448.62 U/mL; 67.66% yield). The enzyme was active under broad temperatures (60 °C optimum), organic solvents, and pH variations. A total of 5% H₂O₂ can only reduce 40% of enzyme activity. However, 1 mM, Fe²⁺, and Cu²⁺ increased enzyme activity by five times. Soy hydrolysis (SPI) byD3L/1 protease produces bioactive compound (<3 KDa), which confirmed the peptide bond in the far UV region (205 nm, 215 nm, 225 nm, and 280 nm). The compound was ineffective towards <i>Serratia marcescens</i> but active against <i>Escherechia coli</i> (47%), <i>Staphylococcus aureus</i> (28%), and <i>Pseudomonas aeruginosa</i> (12%).