This study aimed to develop bioactive protein hydrolysates from low-value edible jellyfish obtained from local fisheries using enzymatic hydrolysis. Fresh white jellyfish were hydrolyzed using several commercial proteases, including alcalase (WJH-Al), flavourzyme (WJH-Fl), and papain (WJH-Pa). The antioxidant, immunomodulatory, and anticancer activities of these white jellyfish hydrolysates (WJH) were investigated. The results demonstrated that the crude WJH exhibited strong antioxidant properties, including DPPH, ABTS, and hydroxyl radical scavenging activities, as well as ferric-reducing antioxidant power. Additionally, the hydrolysates showed notable immunomodulatory activity. However, all WJH samples displayed relatively low ability to inhibit HepG2 cell proliferation at the tested concentrations. Among the hydrolysates, WJH-Pa demonstrated the highest antioxidant and immunomodulatory activities and was therefore selected for further bioactive peptide isolation and characterization. Ultrafiltration membranes with three molecular weight (MW) cut-offs (1, 3, 10 kDa) were used for peptide fractionation from WJH-Pa. Six potential peptides were identified with the MW range of 1049–1292 Da, comprising 9–12 residues, which exhibited strong antioxidant and immunomodulatory activities.