Abstract: The present invention provides a process for the preparation of protein hydrolysate from soy flour, which comprises preparing aqueous slurry of defatted soy flour having 6-12% w/v of solid content, hydrolyzing the said slurry using fungal protease at pH 7-8 and temperature 43±5° C. to get 20-40% degree of hydrolysis (DH), further hydrolyzing using papain at temperature 53±5° C. under stirring till completion of hydrolysis to 30-45% DH, inactivating residual enzyme in a known manner, separating the solids and drying the clarified supernatant thus obtained to get protein hydrolysate.