The present study investigated the effects of peppermint (Mentha piperita), dill (Anethum graveolens) and basil (Ocimum basilicum) on yogurt formation, proteolysis and inhibition of angiotensin-1 converting enzyme (ACE). Herbal-yogurts had faster rates of pH reduction than plain-yogurt. All herbal-yogurts had higher (p < 0.05) antioxidant activities than plain-yogurt, both at the end of fermentation and throughout the storage period. The o-phthalaldehyde (OPA) peptides in herbal-yogurts increased by 28–36% after 7 days of storage. All herbal-yogurts showed higher anti-ACE activity than plain-yogurt at corresponding storage periods. M. piperita yogurt had highest inhibitory effect on ACE activity throughout the storage period. Peppermint, dill and basil may be used to modify microbial fermentation of milk with the intention of producing dairy products with higher antioxidant and enhanced anti-ACE activities.