Protein-derived components including proteins and peptides are important to human nutrition and health because they are a source of energy and essential nutrients. Moreover, some of them exhibit bioactive properties such as antioxidant, antimicrobial, anticancer, and anti-hypertension activities. However, the poor stability, unpleasant flavor, and difficulty in separating protein-derived components currently limits their application as functional ingredients in many functional foods, supplements, and pharmaceuticals. Cyclodextrins (CDs) can overcome some of the limitations of protein-derived components by forming host-guest inclusion complexes with specific amino acid moieties. The formation, structure, and properties of these complexes can be characterized using various computational and experimental approaches. The properties of host-guest complexes can be modulated by modifying the CDs, which can extend or improve their functionality. Key findings and conclusions: The host-guest properties of CDs can be used to develop detection and separation technologies for protein-derived components. These properties can also be used to encapsulate protein-derived components in CD-based delivery systems, thereby improving their water-dispersibility, stability, flavor profile, and functional attributes. Overall, CDs have great potential for the production, application, and characterization of protein-derived components in functional foods. However, further research is required to evaluate their application in real food products and to establish their safety profiles and efficacy using in vivo methods.