The beneficial effects of food-derived antioxidant (AO) in health promotion and disease prevention are being increasingly recognised. Recently there has been a particular focus on milk-derived peptides as a source of AOs, these peptides are inactive within the sequence of the parent protein but can be released during enzyme hydrolysis. Once released, the peptides have been shown to possess radical scavenging, metal ion chelation properties and the ability to inhibit lipid peroxidation. A variety of methods have been used to evaluate in vitro AO capacity, however, there is no standardised methodology which hinders comparison of data. This review provides an overview on the generation of AO peptides from milk proteins, the proposed mechanisms of protein/peptide induced AO capacity, in vitro measurement of AO capacity, in vivo evaluation of plasma AO capacity and the bioavailability of AO peptides. The understanding gained from other food proteins is referred to where specific data on milk derived peptides is limited. The potential applications and health benefits of AO peptides are discussed with a particular focus on the aging population. The regulatory requirements for peptide-based AO functional foods are also considered.