Premature birth rates and premature infant morbidity remain discouragingly high. Improving nourishment for these infants is the key for accelerating their development and decreasing disease risk. Dietary protein is essential for growth and development of infants. Studies on protein nourishment for premature infants have focused on protein requirements for catch-up growth, nitrogen balance, and digestive protease concentrations and activities. However, little is known about the processes and products of protein digestion in the premature infant. This review briefly summarizes the protein requirements of term and preterm infants, and the protein content of milk from women delivering preterm and at term. An in-depth review is presented of the current knowledge of term and preterm infant dietary protein digestion, including human milk protease and anti-protease concentrations; neonatal intestinal pH, and enzyme activities and concentrations; and protein fermentation by intestinal bacteria. The advantages and disadvantages of incomplete protein digestion as well as factors that increase resistance to proteolysis of particular proteins are discussed. In order to better understand protein digestion in preterm and term infants, future studies should examine protein and peptide fragment products of digestion in saliva, gastric, intestinal and fecal samples, as well as the effects of the gut micro biome on protein degradation. The confluence of new mass spectrometry technology and new bioinformatics programs will now allow thorough identification of the array of peptides produced in the infant as they are digested.