The upsurging global population, along with the increasing cost of traditional sources of food proteins, provides an opportunity to directly utilize plant-derived proteins in human diets. Recently, the utilization of agro-industrial-generated raw byproducts has attracted the attention of modern food industries toward the production of sustainable, nutritious, and biofriendly products. Plant-derived proteins are among the promising materials being investigated. In particular, cottonseed protein, an important byproduct generated during the processing of cottonseed, is abundant in basic amino acids linked with several bioactivities. The suitability of using cottonseed protein products in terms of functional attributes and nutritional value in food systems will ultimately determine the magnitude of their application in the food industry. Techniques used for the most effective extraction of cottonseed protein with an esculent gossypol concentration have been comprehensively discussed. The bioactivities of enzymatically obtained cottonseed protein hydrolysates can be employed for fabricating bioactive packaging materials. Cottonseed proteins exhibit a plethora of bioactivities, such as antioxidant, antimicrobial, immunomodulatory, and angiotensin-converting enzyme inhibitory activities. Their superior functional food properties and relatively lower cost than other plant proteins make them suitable candidates for various food and nonfood applications. In this review, recent developments regarding the extraction, hydrolysate preparation, bioactivities, and industrial applications of cottonseed protein are thoroughly discussed.