Continuous hydrolysis of sodium caseinate by alcalase was investigated in a recycle bioreactor coupled to an inorganic M5 membrane module. The effects of various substrate concentrations and the role of an ultrafiltration membrane on conversion rate were reported. Although a high level of conversion was obtained in the retentate side at a steady state, only part of the products formed was transmitted through the inorganic membrane. Degree of hydrolysis and product concentration in the reactor seem to be the main factors limiting product output during the continuous hydrolysis.