Recovery of functional iron-binding protein hydrolysate from Acetes japonicus employing enzymatic hydrolysis and iron-chelating peptide identification were conducted in this study. The result showed that under the optimal hydrolysis condition including Flavourzyme, pH 5, 50 degrees C, E:S ratio of 27.4 U/g protein and hydrolysis time of 4.8 h, the obtained proteolysate displayed the maximal iron-binding capacity (IBC) of 177.7 mu gFe(2+)/g protein and comprehended 38,77 % of essential amino acids. Functional features of the Acetes proteolysate encompassing solubility, heat stability, foaming and emulsifying property, oil and water holding capacity were also noteworthy. Peptide fractionation was performed using ultrafiltration and the 1 - 3 kDa fraction expressed the highest IBC of 120.43 +/- 0.15 mu gFe(2+)/g protein, 13.7 times lower than that of disodium ethylenediaminetetraacetate (Na(2)EDTA). From this fraction, two iron-binding peptides of DSVNFPVHGL (1083.53 Da) and FKV-GQENTPILK (1372.77 Da) were identified utilizing nano-UHPLC-MS/MS as well as their de novo spatial structures and interaction with ferrous ion were simulated by PEP-FOLD 3. As a whole, the proteolysate/peptides could be filled as an iron chelator which could shield human body from iron deficient-related disorders or as a functional proteolysate preparation to upgrade food properties.