In order to develop more sustainable food systems, there is a need to find methods that simultaneously consider environmental impacts and nutritional benefits. The purpose of this study was to develop a functional unit to be used in LCA of foods that builds on the nutritional value of food products. We used the content and quality of proteins as a basis, and included dietary context as part of our method, since the nutritional value of a nutrient depends on the total dietary intake. Our method uses the digestible intake of the nine essential amino acids in the product and relates these values to the equivalent total dietary intake of the same amino acids. We also employed simpler functional units such as “gram (g) protein” and “g digestible protein.” We quantified the functional units for three dietary contexts and applied it on LCA results for bread, chicken fillet, minced pork, minced beef, milk and pea soup. The results showed that the relative differences between products changed when using a protein-based functional unit, with the largest change occurring when going from mass as the functional unit to g protein. By introducing protein digestibility, the systematic under-valuation of the animal products was partly avoided with little additional effort. The most advanced functional unit affected the results compared to the mass-based functional unit most, but required significantly more data. The impact of dietary context was smaller than expected; hence, it might be possible to simplify the inclusion of dietary context by using aggregated descriptions of diets. The method presented is valuable for adding an important aspect of nutrition (protein quality and content) to the LCA results of single products, but there is a large scope for development.