Bioactive compounds include both essential and non-essential compounds, which have health effect and can be gained by food chain as natural constituents. These compounds are produced by a diverse range of microorganisms including eukaryotes, archaea, and bacteria and have found potential applications in pharmaceutical, agrochemicals, nutraceuticals and food industries. Some of the bio-therapeutic compounds of microbial origin include antimicrobial, antioxidants, immunosuppressive, anticancer, and anti-inflammatory compounds. Among the bioactive compounds of microbial origin, the compounds produced by bacteria including both Gram-positive and Gram-negative are most widely studied. A number of bacteria yielding compounds, such as peptides, polyphenols, polyunsaturated fatty acids, polysaccharides, amino acids, vitamins, etc. have the potential to bestow health benefits when consumed through a food source. Among the Gram-positive bacteria, lactic acid bacteria (LAB) well known for their health benefits are highly favored in food industry owing to their capability to produce a wide range of bioactive compounds during fermentation including bacteriocins, exoploysaccahrides, lactic acid etc. With the recent advancement in the field of biotechnology, a number of research studies has investigated production of a vast array of novel bioactive compounds having immense potential for application in various sectors most importantly the food sector. In recent years, vast number of research has focused on exploring new ways to cultivate and use microbes to produce these valuable compounds for food applications. Presently, Artificial Intelligence (AI) and Machine learning (ML) has allowed prediction and identification of new bioactive compounds and has aided with the scale-up production of bioactive compounds via optimized bio-process strategy. In this comprehensive review we cover potential aspects of microbial-derived bioactive compounds emphasizing especially on the role of lactic acid bacteria as a functional food component.