The mechanism of action of food-derived angiotensin-I-converting enzyme (ACE) inhibitory peptides has not been completely elucidated. In the present study, ion-exchange chromatography, gel filtration chromatography, reverse phase-high performance liquid chromatography, and liquid chromatography-electrospray ionization–tandem mass (LC-ESI-MS/MS) were employed for purifying and identifying the ACE inhibitory peptides from hazelnut. To understand the mode of action of these peptides, ACE inhibition kinetics, in vitro and in vivo bioavailability assays, active site analysis, and interaction between the inhibitory peptides and ACE were investigated. The results identified novel ACE inhibitory peptides Ala-Val-Lys-Val-Leu (AVKVL), Tyr-Leu-Val-Arg (YLVR), and Thr-Leu-Val-Gly-Arg (TLVGR) with IC₅₀ values of 73.06, 15.42, and 249.3 μM, respectively. All peptides inhibited the ACE activity via a non-competitive mode. The binding free energies of AVKVL, YLVR, and TLVGR for ACE were −3.46, −6.48, and −7.37 kcal/mol, respectively. The strong inhibition of ACE by YLVR may be attributed to the formation of cation–pi interactions.