This study investigated the preparation of seasoned anchovy sauce (SAS) and its functional characteristics by using aminopeptidase active fractions (AAFs) derived from squid Todarodes pacificus hepatopancreas as a bitter taste improver. As the base of the SAS, a hydrolysate (AAAH) prepared by continuously treating raw anchovies with Alcalase- AAF was used. The high-performance liquid chromatography profile of the AAAH suggested that the action of AAFs decreased the hydrophobicity of the N-terminal peptide related to bitterness in the protein hydrolysates. SAS was prepared by blending with the AAAH and other ingredients. The crude protein (2.5%), carbohydrates (18.4%), amino acid-nitrogen (1,325.1 mg/100 mL), and total free and released amino acids (FRAAs, 700.2 mg/100 mL) of SAS were higher than those of commercial anchovy sauce (CAS). Sensory evaluation revealed that SAS was superior to CAS in flavor, color, and taste. The main FRAAs of SAS were glycine (16.8%), alanine (13.2%), glutamic acid (7.8%), and leucine (7.3%). The amino acids that had a major influence on the taste according to the SAS taste values were glutamic acid, aspartic acid, alanine, and histidine. The angiotensin-converting enzyme inhibitory (2.21 mg/mL) and antioxidant activities (3.58 mg/mL) of SAS were superior to those of CAS.