Dipeptidyl-peptidase IV (DPP-IV) inhibitors are among the newest agents to regulate blood glucose levels by preventing degradation of the gut-derived hormone GLP-1. These inhibitors play an important role in regulating insulin secretion. In this study, DPP-IV inhibitory peptides were prepared from sea cucumber (Holotharia tubulosa) by enzymatic hydrolysis. The types of protease, their concentrations, and hydrolysis times were optimized to maximize DPP-IV inhibition, protein recovery (PR), and degree of hydrolysis (DH). In addition, the molecular weight distribution and the total amino acid composition of each hydrolysate were determined. DPP-IV inhibitory peptide sequences were identified by UPLC-MS/MS. Sea cucumber hydrolysates prepared with a 1:1 combination of papain and Protamex displayed optimal hydrolysis efficiency, and yielded products exhibiting the highest DPP-IV inhibition and PR. Optimal hydrolysis conditions were as follows: the total amount of Protamex added was 1% of the mass of the dry sea cucumber, and hydrolysis time was 4 h. Under these optimal conditions, DPP-IV inhibition, PR, and DH were 66.97%, 76.25%, and 6.10%, respectively. Most peptide molecular weights in the optimal enzymatic hydrolysates were under 5000 u. The peptides were rich in Pro, Ala, and other amino acids related to DPP-IV inhibition. Peptides within the hydrolysates were identified by UPLC-MS/MS. Twenty eight of these polypeptides (with molecular weights ranging from 500 to 1936 u) were found by Mascot analysis to possess features typical of DPP-IV inhibitory peptides. The results of this study lay a foundation for development of hypoglycemic agents from sea cucumber.