Bitter peptides are generated during enzymatic protein hydrolysis. Their bitterness mainly originates from hydrophobic amino acids, which significantly affects the flavor quality of foods. Although these peptides exhibit certain biological activities, their intense bitter taste greatly limits the application of protein hydrolysates in food products. This review systematically summarizes the formation pathways of bitter peptides, their dual effects on food sensory quality, and the methods currently used for their separation and identification. It further explores the structural basis and taste mechanism of bitter peptides, while providing a comparative analysis of various debittering methods, including selective separation, masking, and structural modification. This review aims to offer theoretical insights and technical references for the utilization of bitter peptides.