This study prepared functional oyster hydrolysates using two-step enzymatic hydrolysis and investigated their functional properties. To prepare two-step enzymatic hydrolysates (TSEH), oysters were hydrolyzed using 1% Protamex (PR) at $40^{circ}C$ and pH 6.0 for 1 hr before sequential treatment with one of the following enzymes for 1 hr: Alcalase (AL), Flavourzyme (FL), Neutrase (NE), pepsin (PE), and trypsin (TR). The PRAL, PRNE and PRTR hydrolysates had significantly greater angiotensin I converting enzyme (ACE) inhibitory activity than did PR and the other TSEHs. Only the antioxidant activity of the PRNE hydrolysate was significantly different (p<0.05), while none of the TSEHs had antimicrobial activity. The oyster hydrolysate prepared by sequential treatment with Protamex and Neutrase (PRNE) had the best ACE inhibitory activity and antioxidant activity, with $IC_{50}$ values of 0.40 and 0.94 mg/mL, respectively. The PRNE hydrolysate was processed through an ultrafiltration (UF) series with molecular weight cut-off (MWCO) membranes of 3, 5, 10, and 30 kDa, and the ACE inhibitory, antioxidant, and antimicrobial activities of the permeates were determined. The permeate through the 3-kDa MWCO membrane had greater ACE inhibitory activity and antioxidant activity than did the other PRNE permeates, with $IC_{50}$ values of 0.11 and 0.40 mg/mL, respectively.