Novel bioactive peptides from camel milk protein hydrolysates (CMPH) were identified and tested for inhibition of cholesterol esterase (CEase), and their possible binding mechanisms were elucidated by molecular docking. Papain-generated CMPH showed the highest degree of hydrolysis. All CMPH produced upon enzymatic degradation demonstrated a dramatic enhancement of CEase inhibition compared with intact camel milk proteins, with papain-generated hydrolysate P9 displaying the highest inhibition. Peptide identification and their modeling through PepSite 2 revealed that among 20 potential bioactive peptides in alcalase-generated hydrolysate A9, only 3 peptides, with sequences KFQWGY, SQDWSFY, and YWYPPQ, showed the highest binding toward CEase catalytic sites. Among 43 peptides in 9-h papain-generated hydrolysate P9, 4 peptides were found to be potent CEase inhibitors. Molecular docking revealed that WPMLQPKVM, CLSPLQMR, MYQQWKFL, and CLSPLQFR from P9 hydrolysates were able to bind to the active site of CEase with good docking scores and molecular mechanics-generalized born surface area binding energies. Overall, this is the first study reporting CEase inhibitory potential of peptides generated from milk proteins.