Aquatic, marine and algae, is reservoir of bioactive compounds, which have considerable potential to supply novel ingredients toward the development of commercial functional food products. Meanwhile, several valuable by-products generate during the manufacturing process. Seafood is still an intact reservoir of valuable compounds with significant potential to provide unique compounds applicable in functional food development. Seafood, as an important part of the diet all around the world, can be used as a source of functional components that are positively affecting the human health. Annually, 50–80 percent of the seafood processing is discarded as waste every year. Algae are also the novel natural resources for their biological and pharmacological properties. This chapter will be discussing the innovations in seafood and algae sector through the valorization of their by-products. Firstly, protein production, its characterization and the protein hydrolysates derived from seafood will be reviewed. Subsequently, bioactivity of the peptides obtained from these protein hydrolysates and other bioactive compounds such as carotenoid compounds derived from seafood including fish, shrimp, alga, and so on will be included. Finally, the main components of algae including sulfated polysaccharides, pigments and proteins will be surveyed.