Conversion of animal by-products to high value-added food ingredients is one of the top trends in the slaughter industry. Enzymatic hydrolysis of animal by-products can generate protein hydrolysates, which provides an opportunity for effective utilisation. However, bitterness of protein hydrolysate is a major undesirable aspect for various applications. In this review, the current knowledge on protein hydrolysates from animal by-products is briefly reviewed. The structural features of bitter peptides and bitter taste receptors are summarised. Moreover, the potential approaches for debittering protein hydrolysates are highlighted, including exopeptidase treatment, Maillard reaction, plastein reaction and encapsulation. In addition, the current debittering strategies and challenges are also discussed. This article presents some opportunities to utilise protein hydrolysates from animal by-products and their debittering methods.