Lactic acid bacteria (LAB) have a very long history of use in the manufacturing processes of fermented foods and a great deal of effort was made to investigate and manipulate the role of LAB in these processes. Today, the diverse group of LAB includes species that are among the best-studied microorganisms and proteolysis is one of the particular physiological traits of LAB of which detailed knowledge was obtained. The proteolytic system involved in casein utilization provides cells with essential amino acids during growth in milk and is also of industrial importance due to its contribution to the development of the organoleptic properties of fermented milk products. For the most extensively studied LAB, Lactococcus lactis, a model for casein proteolysis, transport, peptidolysis, and regulation thereof is now established. In addition to nutrient processing, cellular proteolysis plays a critical role in polypeptide quality control and in many regulatory circuits by keeping basal levels of regulatory proteins low and removing them when they are no longer needed. As part of the industrial processes, LAB are challenged by various stress conditions that are likely to affect metabolic activities, including proteolysis. While environmental stress responses of LAB have received increasing interest in recent years, our current knowledge on stress-related proteolysis in LAB is almost exclusively based on studies on L. lactis. This review provides the current status in the research of proteolytic systems of LAB with industrial relevance.