Microalgal proteins are promising sources for functional nutrition and a sustainable candidate for nutraceutical formulations. They also gain importance due to emerging focus on a healthy nutrition and increase in the number of chronic diseases. In this study, dried dietary species of microalga, Chlorella vulgaris, and cyanobacterium Spirulina platensis were hydrolyzed with pancreatin enzyme to obtain protein hydrolysates. The hydrolysis yield of biomass was 55.1 +/- 0.1 and 64.8 +/- 3.6% for C. vulgaris and S. platensis; respectively. Digestibility, as an indicator for dietary utilization, was also investigated. In vitro protein digestibility (IVPD) values depicted that cell wall structure due to the taxonomical differences affected both hydrolysis and digestibility yield of the crude biomass (p < 0.05). Epithelial cells (Vero) maintained their viability around 70%, even in relatively higher concentrations of hydrolysates in the culture. The protein hydrolysates showed no any antimicrobial activities. This study clearly shows that the conventional protein sources in nutraceutical formulations such as soy, whey, and fish proteins can be replaced by enzymatic hydrolysates of microalgae, which shows elevated digestibility values as a sustainable and reliable source.