After conversion of lactose to lactic acid, several biochemical changes occur such as enhanced protein digestibility, fatty acids release, and production of bioactive compounds etc. during the fermentation process that brings nutritional and quality improvement in the fermented dairy products (FDP). A diverse range of lactic acid bacteria (LAB) is being utilized for the development of FDP with specific desirable techno-functional attributes. This review contributes to the knowledge of basic pathways and changes during fermentation process and the current research on techniques used for identification and quantification of metabolites. The focus of this article is mainly on the metabolites responsible for maintaining the desired attributes and health benefits of FDP as well as their characterization from raw milk. LAB genera including Lactobacillus, Streptococcus, Leuconostoc, Pediococcus and Lactococcus are involved in the fermentation of milk and milk products. LAB species accrue these benefits and desirable properties of FDP producing the bioactive compounds and metabolites using homo-fermentative and heterofermentative pathways. Generation of metabolites vary with incubation and other processing conditions and are analyzed and quantified using highly advanced and sophisticated instrumentation including nuclear magnetic resonance, mass-spectrometry based techniques. Health benefits of FDP are mainly possible due to the biological roles of such metabolites that also cause technological improvements desired by dairy manufacturers and consumers.