Proteins are fundamental to food systems due to their structural, nutritional, and functional roles. With increasing consumer awareness of health and sustainability, the demand for protein-rich foods from diverse and eco-friendly sources is rising. Fermentation has emerged as a transformative approach for enhancing the nutritional value, functionality, and sensory appeal of protein-based foods, while also contributing to environmental and economic sustainability. This review explores the multifaceted impact of fermentation on proteins, focusing on nutritional enhancement, functional improvements, technological adaptability, and sensory optimization. It highlights how microbial fermentation can modify protein structures, reduce allergenicity, improve digestibility, and generate bioactive compounds. The diversity of protein sources, microbial strains, and fermentation parameters offers a versatile platform for tailoring food products to meet evolving consumer expectations. By critically examining current research and industrial practices, this paper underscores the importance of selecting appropriate protein substrates and microbial hosts to maximize the benefits of fermentation. The insights provided aim to guide future innovations in developing sustainable, health-promoting, and consumer-acceptable fermented protein products.