Gelatinases are enzymes used to hydrolyze gelatin into peptides and amino acids. Enzymaticrnhydrolysis of gelatin increase itâ€™s functional, textural and nutritional characteristics. Thernhydrolysates have neutral taste, low bloom and contain high amount of purified protein. In recentrnyears gelatin hydolysates find a number of increasing applications in food and none foodrnproducts. The main objective of this study was to isolate gelatinase enzyme from soil bacteriarnand optimize the reaction condition for gelatin hydrolysis. A total of 100 bacterial isolates werernisolated from soil samples collected around Addis Ababa University (Arat Kilo Campus) andrnwater samples collected from Lake Afdera. All isolates were screened for the production ofrngelatinase on gelatin containing media. Based on the properties of the enzyme, one isolaterndesignated as aau17 was selected for further study. The organism can grow under solid-staternfermentation and produce gelatinase enzyme with high activity using wheat bran as a carbonrnsource. The enzyme was optimally active at a temperature of 50oC and at pH 8. The optimumrnenzyme production under solid state fermentation includes an incubation period of 120 h and arnmoisture content of 66.7%. The isolate produced more enzymes up on addition of peptone as arnnitrogen source. The enzyme was used to produce gelatin hydrolysate by hydrolyzing animalrnbone, animal skin, animal hooves and commercial gelatin. The production process for the gelatinrnhydrolysis was optimized by varying enzyme concentration and incubation time. The hydrolysisrnhas maximum activity at 4 h incubation period and at high amount of enzyme concentration. Thisrnstudy indicated that by using product of animal waste can be converted to useful gelatinrnhydrolysates using microbial gelatinases for various applications.