Grass carp skin pieces were homogenized in water and hydrolyzed by Alcalase®, collagenase, proteinase K, and/or trypsin at their optimum conditions. Samples were taken at various degrees of hydrolysis and were evaluated for antioxidant, antimicrobial, and angiotensin-converting enzyme inhibitory activities. Alcalase and collagenase completely hydrolyzed the skin with different rates, and released peptides with antioxidant and angiotensin-converting enzyme-inhibitory activity. These activities increased linearly with increasing degrees of hydrolysis. Subsequent incubation of the collagenase hydrolysates with trypsin slightly increased the antioxidant activity. Proteinase K, although only partially hydrolyzing the skin, also catalyzed the release of peptides with antioxidant and angiotensin-converting enzyme-inhibitory activities. These results show that skin by-products from grass carp can be a source of bioactive peptides produced by a one-step reaction. Such hydrolysates may be applied in food products to prolong shelf life and provide beneficial effects on blood pressure.