© 2020, Association of Food Scientists & Technologists (India).Distillation by-products of peppermint have not been considered for the valorization of bioactive compounds. In this study, by-products of peppermint after hydrodistillation, hydrosol and distilled leaves, were investigated followed by the most effective fraction was incorporated into ice cream formulations in order to improve the health promoting effects including antioxidant and α-glucosidase inhibition capacities of the ice creams. Distilled leaves of peppermint were subjected to sequential extraction by ethyl acetate and ethanol. HPLC analyses of eriocitrin and total phenolic analysis indicated that hydrosol contained significant amount of phenolics after 2 h hydrodistillation. Extending hydrodistillation from 1 to 2 h had insignificant effects on phenolic content. Distilled leaves of peppermint had extract yield of 7.39 and 7.19 g/100 mL in 1 and 2 h ethyl acetate extraction, respectively. The predominant phenolic of peppermint (eriocitrin) was 917.5 mg/L in hydrosol after 1 h distillation. Four h distillation of peppermint resulted in decrease in the amount of eriocitrin, however, hydrosol contained valuable amount of phenolics (840.1 mg/L). Hydrosols displayed higher antioxidant capacity in all tested methods than distilled leaves. Hydrosols, at equal amount of phenolics, had higher α-glucosidase inhibition capacity (5.92 µg/mL) than ethyl acetate extract (14.62 µg/mL) and ethanol extract (17.04 µg/mL) of deodorized leaves. Hydrosols were spray dried with the aid of maltodextrin in order to increase drying yield and incorporate the spray dried hydrosol (SDH) into ice cream formulations. Among others, ice cream incorporated with 0.5% of SDH was accepted by the panelists without damaging sensorial properties of ice cream.