The functional sauce from shrimp byproducts (heads, shells and tails) was prepared and examined for its, characterization. The results of volatile basic nitrogen (VBN) suggested that shrimp byproducts were suitable materials for preparing functional sauce. The shrimp hydrolysate, which was incubated with Alcalase for 30 min, showed excellent yield and ACE inhibitory activity. The concentrated sauce from shrimp byproduct was high in crude protein, while low in VBN content and salinity when compared to commercial shrimp sauce. The total amino acid content (23,095.2 mg/100 mL) of concentrated sauce from shrimp byproduct was higher than that (4,582.5 mg/100 smL) of commercial shrimp sauce; also, the major amino acids were glutamic acid, aspartic acid, arginine and lysine. The free amino acid content and taste value of concentrated sauce from shrimp byproduct were 2,705.5 mg/100 mL and 81.0, respectively. The results on the taste value of concentrated sauce from shrimp byproducts suggested that the major taste active compounds among free amino acids were glutamic acid and aspartic acid.