Due to the global need for sustainably produced protein, optimal usage of animal by-product proteins and novel protein sources like insects are being explored. Dry fractionation, an emerging technology, offers significantly lower energy consumptions and no use of chemicals compared to conventional fractionation technologies. This review evaluates the current state and potential of dry fractionation for animal by-products and insects, with respect to characteristics of raw materials, pre-processing methods, milling, and product-oriented process optimisation. The reviewed studies focussed on compound enrichment or fractions with distinct functionalities, rather than in depth product and process optimisation linked to composition and functionality. For animal by-products, optimisation should focus on milling and separation, whereas for insects optimisation should concern the entire process chain. A product portfolio and insight in compositional and functional properties after dry fractionation would allow more efficient use of animal by-product and insect fractions, thereby supporting the protein transition.