Cheddar cheese-derived bioactive peptides are considered a potential component of functional foods. A positive impact of bioactive peptides on diet-related chronic, non-communicable diseases, like obesity, cardiovascular diseases, and diabetes, has been observed. Bioactive peptides possess multifunctional therapeutic potentials, including antimicrobial, immunomodulatory, antioxidant, enzyme inhibitory effects, anti-thrombotic, and phyto-pathological activities against various toxic compounds. Peptides can regulate human immune, gastrointestinal, hormonal, and neurological responses, which play an integral role in the deterrence and treatment of certain diseases like cancer, osteoporosis, hypertension, and other health disorders, as described in the present review. This review summarizes the categories of the Cheddar cheese-derived bioactive peptides, their general characteristics, physiological functions, and possible applications in healthcare.