The field of nutraceutical research has rapidly expanded as more evidence suggests that functional foods like milk have positive health impacts beyond their nutritional value. The consumption of proteins and peptides derived from milk have been shown to display an array of bioactive properties that could be helpful in the management of many western diseases such as inflammatory, cardiovascular and metabolic. Immunomodulatory nutraceuticals have gained special attention due to their therapeutic potential for the amelioration of chronic inflammatory disorders as patients seek alternatives to drugs which often have side effects which can outweigh their benefits. Macrophages and dendritic cells are both key players in the induction, propagation and resolution of inflammatory responses, and are known to actively contribute to the pathogenesis of many inflammatory diseases. As such, these cells were chosen in this study to investigate the effects of bovine milk derived compounds on inflammatory processes. Sodium caseinate exhibited immunomodulatory properties, which were attributed to the kappa-casein subunit. Kappa-casein primed novel suppressive murine macrophages (CD54high, CD206high, CD40high, SOCS1high & SOCS3high) and semi-immature dendritic cell (CD209low, CD40low, SOCS1high & SOCS3high) phenotypes that have not been previously described. It inhibited the induction of pro-inflammatory cytokines in both cell types by targeting the NFκB signal transduction pathways in a mechanism that may involve the upregulation of SOCS1 and SOCS3. These results were transferable in human derived macrophages. All kappa-casein induced phenotypes significantly suppressed the production of IL-2 from CD4+ T-cell in-vitro & in in-vivo, a key cytokine required for effector T-cell responses. These immunomodulatory effects are attributed to a novel fragment of kappa-casein. Given the powerful immuno-modulatory effects exhibited by kappa-casein and our understanding of the immune pathology associated with inflammatory diseases, this fragment has potential as an oral nutraceutical to manage diseases such as inflammatory bowel disease and therefore warrants further investigation.