Algae protein waste is a byproduct during production of algae essence from Chlorella vulgaris. There is no known report on the anticancer peptides derived from the microalgae protein waste. In this paper, the peptide fraction isolated from pepsin hydrolysate of algae protein waste had strong dose-dependent antiproliferation and induced a post-G1 cell cycle arrest in AGS cells; however, no cytotoxicity was observed in WI-38 lung fibroblasts cells in vitro. The peptide fraction also revealed much better antioxidant activity toward peroxyl radicals and LDL than those of Trolox. Among these peptides, a potent antiproliferative, antioxidant, and NO-production-inhibiting hendecapeptide was isolated, and its amino acid sequence was VECYGPNRPQF. These results demonstrate that inexpensive algae protein waste could be a new alternative to produce anticancer peptides.