Colostrum contains bioactive components protecting the newborn intestine against bacteria. It is unclear how to optimize processing conditions with highest product bioactivity. Non-pasteurized (BC00), standard-pasteurized (72 °C-15 s, BC72), gently-pasteurized bovine colostrums without (63 °C-30 min, BC63) and with gamma-irradiation (BC63g) were tested for effects on bacterial growth inhibition (Escherichia coli, Staphylococcus aureus and S. epidermidis), intestinal epithelial cell (IEC) proliferation and cytokine secretion in vitro. Thermal processing decreased endogenous bacteria and IgG levels. All BCs inhibited bacterial growth 1–2 h after inoculation, but only BC00, BC63 and BC63g retained activity after 4–24 h. After 4 h, the activity against S. epidermidis of BC63g was lower than BC00 but still potent when mixed with formula. All BCs stimulated IEC proliferation, with the most pronounced responses for BC00. Only BC00 and BC63 increased IL-8 secretion in lipopolysaccharide-stimulated IECs. Thermal processing reduced bioactivity and combined gentle pasteurization and gamma-irradiation improved BC sterility and bioactivity, relative to standard pasteurization.