Goat milk is highly nutritious and is consumed in many countries, but the development of functional foods from goat milk has been slow compared to that for other types of milk. The aim of this study was to develop a goat milk protein hydrolysate (GMPH) with enhanced digestibility and better hypoallergenic properties in comparison with other protein sources such as ovalbumin and soy protein. Goat milk protein was digested with four commercial food-grade proteases (separately) under various conditions to achieve the best hydrolysis of αs -casein and β-lactoglobulin. It was shown that treatment with alcalase (0.4%, 60℃ for 30 min) effectively degraded these two proteins, as determined by SDS-PAGE, measurement of nonprotein nitrogen content, and reverse-phase high-performance liquid chromatography. Hydrolysis with alcalase resulted in a significant decrease in β-lactoglobulin concentration (almost to nil) and a ~40% reduction in the level of αs-casein. Quantification of histamine and TNF-α released from HMC-1 cells (human mast cell line) showed that the GMPH did not induce an allergic response when compared to the control. Hence, the GMPH may be useful for development of novel foods for infants, the elderly, and convalescent patients, to replace cow milk.