Extensive enzymatic hydrolysis of milk proteins in reconstituted buttermilk powder was combined with ultrafiltration to generate a phospholipid (PL) enriched fraction with maximum permeation of hydrolysed peptides. Buttermilk, naturally high in PLs, is the ideal substrate for enrichment of these bio- and techno-functionally active compounds. A 7.8 fold increase in PL was achieved in the 50 kDa retentate; 6.16 ± 0.02% total PL compared with 0.79 ± 0.01% in the starting substrate, an increase considerably greater than previously reported. Total lipid content (% dry matter) increased 6.3 fold in the retentate, 43.43 ± 0.61%, from the starting substrate, 6.84 ± 0.17%. This combined strategic approach enabled maximum enrichment of PLs with no transmission of lipid material into the permeate, 0.09 ± 0.02% total lipid, and non-detectable levels of PLs recovered in the permeate, 0.00 ± 0.01% total PL.