Rainbow trout (Oncorhynchus mykiss) is one of the most widely farmed and consumed aquaculture species worldwide. Processing generates large amounts of by-products, including heads, frames, skin, and viscera, which are often discarded. However, these by-products are a valuable source of high-quality protein that can be converted into bioactive peptides through controlled hydrolysis. Numerous studies have shown that trout-derived peptides exhibit a wide range of functional properties, including antioxidant, antihypertensive, antimicrobial, and anti-inflammatory activities. From this perspective, the article provides a critical, up-to-date review of recent advances in the valorization of proteins from rainbow trout by-products, with an emphasis on the most efficient processing methods (including enzymatic, chemical, and microbial hydrolysis) and their potential applications in the food and nutraceutical industries. In addition, downstream processes such as ultrafiltration and chromatographic separation are discussed in the context of peptide purification and recovery. Finally, a systematized industrial process for the integral utilization of these by-products is proposed. Therefore, the objective of this review is to analyze and synthesize the available scientific evidence on the production, functionality, and applications of bioactive peptides derived from rainbow trout by-products, highlighting key process parameters such as enzyme type, pH, temperature, and degree of hydrolysis and their influence on peptide size (typically <5 kDa), yield, and bioactivity, and to propose a viable industrial process for their sustainable valorization. Despite these advances, challenges related to process standardization, cost efficiency, and industrial scalability remain.