Abstract: Whey protein, a by-product obtained during the process of cheese production from milk, serves as a promising source of bioactive peptides and essential amino acids, offering significant nutritional and therapeutic potential. In recent years, advancements in biocatalytic hydrolysis technique have brought significant attention to whey protein peptides, mainly due to their distinct and beneficial biological activities. The current review enlightens about recent advancements in the research and utilization of hydrolyzed whey proteins, with particular emphasis on the methods used for the preparation of whey protein hydrolysates and their application in infant formula formulations. The manuscript initially presents innovative methodologies for preparing whey protein hydrolysates and systematically investigates the benefits and limitations of chemical, enzymatic, and bio-fermentation approaches. Moreover, the impact of incorporating whey protein hydrolysate on the physicochemical characteristics and sensory properties of infant formula, including emulsification capacity, thermal stability, viscosity, storage stability, and solubility, was comprehensively evaluated. Eventually, the impact of whey protein hydrolysate supplementation on the bioactivities of gastrointestinal tolerance, digestibility, allergenicity, and antioxidant properties of infant formulas was carefully investigated. Future research aspects emphasize the potential of whey protein hydrolysates, particularly in activity prediction and functional analysis when integrated with multi-omics approaches. Such efforts aim to generate innovative insights and references that can drive the advancement and application of whey protein hydrolysates in infant formula development.