The liver, a by-product of livestock processing, is abundant in protein and serves as an excellent precursor for bioactive and taste-active peptides. However, comprehensive reviews on its valorization remain limited. This review summarizes recent advances in utilizing liver as a source of bioactive peptides (BPs) and taste-active peptides (TAPs). It systematically outlines the composition of liver and preparation methods of liver-derived peptides, discusses the diverse bioactivities of peptides from livestock liver and its taste characteristics, and also examines current challenges along with future perspectives. Liver-derived peptides possess various bioactivities, such as antioxidant, anti-inflammatory, antihypertensive, and metabolism-regulatory activities. Meanwhile, they can elicit the umami, sweet, and bitter taste primarily through different taste transduction receptors. The bioactive and taste properties of peptides are closely related to molecular weight, hydrophobicity, and composition of peptides. Furthermore, ultrasound treatment and the Maillard reaction are effective methods for improving the taste characteristics of liver-derived peptides. However, current research on liver-derived peptides remains limited by inefficient screening and prediction of BPs, low bioavailability, and a narrow focus on TAPs. Overall, this review provides a theoretical reference for high-value utilization of liver-derived peptides from livestock by-products.