Osteoporosis is characterized by low bone mass, bone microarchitecture disruption, and collagen loss, leading to increased fracture risk. In the current study, collagen peptides were extracted from milkfish scales (MS) to develop potential therapeutic candidates for osteoporosis. MS was used to synthesize a crude extract of fish scales (FS), collagen liquid (COL), and hydroxyapatite powder (HA). COL samples were further categorized according to the peptide size of total COL (0.1 mg/mL), COL < 1 kDa (0.1 mg/mL), COL: 1–10 kDa (0.1 mg/mL), and COL > 10 kDa (0.1 mg/mL) to determine it. Semi-quantitative reverse transcription polymerase chain reaction (sqRT-PCR) and immunofluorescence labeling were used to assess the expression levels of specific mRNA and proteins in vitro. For in vivo studies, mice ovariectomy (OVX)-induced postmenopausal osteoporosis were developed, while the sham surgery (Sham) group was treated as a control. Collagen peptides (CP) from MS inhibited osteoclast differentiation in RAW264.7 cells following an insult with nuclear factor kappa-B ligand (RANKL). CP also enhanced osteoblast proliferation in MG-63 cells, possibly through downregulating NFATc1 and TRAP mRNA expression and upregulating ALP and OPG mRNA levels. Furthermore, COL1 kDa also inhibited bone density loss in osteoporotic mice. Taken together, CP may reduce RANKL-induced osteoclast activity while promoting osteoblast synthesis, and therefore may act as a potential therapeutic agent for the prevention and control of osteoporosis.