The taxonomically diverse lactic acid bacteria (LAB) are unified by their capability to produce lactic acid from carbohydrates by fermentation. The LAB Lactococcus (L.) lactis has been characterized into great detail and is increasingly used as a production host for heterologous proteins. L. lactis is a non-pathogenic and non-colonizing LAB species and can be efficiently engineered to produce proteins of viral, bacterial or eukaryotic origin, both intra- or extracellularly. Importantly, orally formulated L. lactis strains (ActoBiotics™), engineered to synthesize and secrete therapeutic peptides and proteins in the gastrointestinal tract, are already in advanced stages of preclinical and clinical development. This review focuses on the genetic engineering of LAB in general and L. lactis in specific to secrete high-quality, correctly processed, bioactive molecules derived from a eukaryotic background. The therapeutic applications of these genetically modified strains are discussed, as well as the need for a sound environmental containment strategy, and a detailed review is presented on Lactococcus strains engineered to produce specific antigens, antibodies, cytokines and trefoil factors, with special regards to immunomodulation.