Human breast milk (HBM) is the “gold standard” for infant nutrition. When breast milk is insufficient or unavailable, infant milk formula (IMF) can provide a safe and nutritious alternative. However, IMFs often differ considerably from HBM in composition, particularly fatty acid profiles, and health function. Here, we compared the digestibility and potential health functions of IMF containing low cream (LC-) or high cream (HC-) content compared to pooled HBM. After simulated infant digestion of these samples, bioavailability of key nutrients and immunomodulatory activities were determined via cell-based in-vitro assays. A Caenorhabditis elegans (C.elegans) leaky gut model was also established to investigate effects on gut health. Distinct differences were observed in higher diversity of peptides released from HC-IMF when compared to LC-IMF during simulated digestion. Higher levels of free fatty acids were absorbed through 21-day differentiated Caco-2/HT-29MTX monolayers from HC-IMF, when compared to LC-IMF and HBM. Furthermore, the immune-modulating properties of HC-IMF appeared to be more in line with HBM than LC-IMF, as observed by comparable secretion of IL-10 and IL-1β from THP-1 cells following exposure. HC-IMF also supported significantly faster intestinal recovery following distortion, vs. LC-IMF in C.elegans. These initial observations suggest that increasing the cream content in infant milk formulation may provide added nutritional and functional benefits which are closer to that of HBM.