Hydrolysates of plant or whey proteins, respectively, contain a variety of bioactive peptides which are promising ingredients of functional foods. The application of hydrolysates in foods, however, is limited due to their notable bitter taste, which is attributed to aromatic and hydrophobic amino acid residues. In the present study, NMR and UV-/fluorescence measurements were performed to investigate interactions between cyclodextrins and individual peptides originating from enzymatically hydrolyzed food proteins, namely isoleucyl-tryptophan and tryptophyl-leucine. It was found that the hydrophobic side chain of aromatic amino acids penetrates directly into the cavity of the cyclodextrins. For tryptophan, tyrosine and phenylalanine, the calculated association constants were less than 600 M-1 (H-1-NMR), indicating weak-moderate interactions. Tryptophan and beta-cyclodextrin formed the most stable complexes. The strength of these complexes increased for tryptophan within the sequence of dipeptides, especially in C-terminal position. Initial investigations on the taste of rice protein hydrolysate have shown that the addition of cyclodextrins except of alpha-cyclodextrin significantly reduced its bitterness. Especially, the use of beta-cyclodextrin was particularly effective. For the first time, we could determine the bitter taste-lowering potential of gamma-cyclodextrin, however, less pronounced compared to beta-cyclodextrin. Therefore, beta-cyclodextrin is the most suitable additive for improving the sensory quality of hydrolysate-containing functional foods.