Found this:
Gelatin is made from collagen, an animal protein. Collagen is extracted from the skin/bones of cows or pigs. It's soaked and cooked, then filtered, refined and evaporated. The finished product is gelatin.
The Torah prohibits only the meat of unkosher animals, but not the bones, horns or hoofs.
The Sages, however, forbade any bones, horns or hoofs which contain moisture. According to this, food made from unkosher bones is forbidden, unless the bones were completely dry.
But during the manufacturing of gelatin, the animal extract becomes totally inedible, such that even a dog will no longer eat it. Now, food which even a dog won't eat loses its status as food. Halachically, it's no different than stones or dirt which are you allowed to eat!
Based on this, some authorities permit gelatin from unkosher animals, since during the process the animal extract becomes unfit for even a dog. Rabbi Moshe Feinstein, zatzal, rules otherwise. He writes that although the animal parts are inedible in the middle of the process, this inedible state is only temporary. Since at the end of the process the unkosher bones are 'resurrected' into an edible product, the original prohibition remains.
In the United States, almost all kashrut organizations accept the stricter opinion and do not endorse gelatin made from unkosher derivatives.