Bioactive peptides play important roles in promoting human health, such as lowering blood pressure, blood sugar and blood lipid, anti-obesity, and anti-cancer. Thus, exploring functional bioactive peptides and developing efficient production technologies are of crucial importance. Herein, we review the development of function discovery and production technology for natural bioactive peptides. Presently, the top-down and bottom-up approaches are mainly used for the function discovery and production of natural active peptides. The top-down approach includes the direct extraction and identification for functional discovery, and the direct extraction, enzymatic hydrolysis and microbial fermentation for production. The bottom-up approach includes the polypeptide modification and database mining for functional discovery, and the chemical synthesis, enzyme synthesis, recombinant expression and cell-free synthesis for production. The top-down approach is usually associated with complicated process, lower efficiency, higher cost, harder quality control, and uncertain functionality, while the bottom-up approach is more suitable for the development of peptide drugs but difficult to be used for functional foods. With the technology development of sequencing and mass spectrometry, it is easier to obtain the proteomic information of various organisms at the molecular level. Based on the proteomic information, the top-down and bottom-up approaches can be combined to overcome the disadvantages of using these two approaches alone, thus providing a new strategy for the rapid development and production of natural active peptides.