Cyclic peptides possess advanced structural characteristics of stability and play a vital role in medical treatment and agriculture. However, the biological functions of microorganism-derived cyclic peptides (MDCPs) and their applications in food industry were relatively absent. MDCPs are derived from extensive fermented food or soil. In this review, the synthesis approaches and structural characteristics are overviewed, while the interrelationship between bioactivities and functions is emphasized. This review summarizes the bioactivities of MDCPs from in vitro to in vivo, including antimicrobial activities, immune regulation, and antiviral cell activation. Their multiple functions as well as applications during food product processing, packaging, and storage are also comprehensively reviewed. Remarkably, some potential risks and cytotoxicity of MDCPs are also critically discussed. Moreover, future applications of MDCPs in the development of novel food additives and bioengineering materials are organized. Based on this review of native MDCPs, it is noteworthy that expected improvements of synthetic cyclic peptides in bioactive properties present potential valuable applications in future food, including artificial meat.