In this study, freshly harvested prawn, Macrobrachium nipponense were hydrolyzed with pepsin to develop a food ingredient and iron supplement. The degree of hydrolysis, protein/peptide concentration and iron-chelating capacity were verified by TCA soluble assay, direct UV spectrophotometric method and orthophenanthroline-based colorimetric assay, respectively. The result of TCA soluble assay revealed a high rate of hydrolysis for the first 6 h, reached the steady-state phase after 8 hours. The highest iron-binding capacity of the hydrolysate (49.7 μg/mg of peptide/protein) was obtained at a degree of hydrolysis of 36.5%. The partial lysate generated by pepsin had high levels of glycine, proline, arginine, alanine, and valine. It seems that in peptic M. nipponense hydrolysate, peptide bonds of Gly, Pro, and Ala residues as well as amino or imino group from Arg side chain support additional affinity for iron. Consequently, hydrolysis and enrichment would be a proper strategy for appropriate gain from this abundant prawn, into a high functional product.