Collagen-derived hydroxyproline-containing peptides show a variety of biological properties in cells. However, no comprehensive study has yet explored the functional links between Hyp-containing peptides and cellular behavior. Here, we show that the dipeptide prolyl-hydroxyproline (Pro–Hyp) exhibits the most significant effect of a number of di- and tri-peptides on mouse tendon cells. We have shown that the cellular uptake of Pro-Hyp is a carrier-mediated process. In addition, Pro-Hyp promotes differentiation/maturation of tendon cells with modulation of lineage-specific factors, has profound effects on cellular phenotypes such as cell proliferation with significantly upregulated ERK-phosphorylation and extracellular matrix production with increased type I collagen network organization, and induced significant chemotactic activity in vitro. Proteomics analysis has identified cellular assembly and organizations, and movement as predicted linked-network pathways in response to Pro-Hyp. Mechanistically, cells treated with Pro-Hyp demonstrate increased directional persistence and significantly increased directed motility and migration velocity, which are accompanied by elongated lamellipodial protrusions with increased active β1-integrin-containing focal contacts and reorganizations of thicker peripheral F-actin fibrils. Thus, our findings document the molecular basis of the functional benefits of Pro-Hyp dipeptide in cellular behavior. Such dynamic properties of collagen-derived Pro-Hyp dipeptide could lead the way to its application to translational medicine.