The aim of this work was to study how different raw material mixtures from cod (Gadus morhua) by-products influenced the composition of the substrate for hydrolysis, yield and chemical composition of the different fractions after the enzymatic hydrolysis using endo-peptidase (Flavourzyme) or exo-peptidase (Neutrase). The most important factor influencing the yield of the different fractions was added water rather than type of enzyme used. The highest lipid yield was obtained in samples without addition of water resulting in a decreased yield of fish protein hydrolysates (FPH). Use of Neutrase produced more dry FPH (23-57%) than Flavourzyme. The amount of oil fraction obtained after Neutrase treatment was up to 10% higher compared to Flavourzyme due to 13-60% smaller emulsion layer and higher degree of hydrolysis in sludge liberating more lipids from sludge to oil fraction. Emulsion, which is not a desirable fraction after hydrolysis can also be reduced or avoided by reduction or/ and elimination of addition of water into hydrolysis mixture. (C) 2004 Elsevier Ltd. All rights reserved.