Mushrooms are prevalently important sources of pharmaceutically active metabolites. Various mushroom species belonging to the <i>Lentinus</i> genus are recognized for their nutritional and therapeutic properties. One such species is <i>L. sajor-caju</i>, which is renowned in Southeast Asian nations for its culinary value. The primary goal of this study is to investigate the potential medicinal properties of <i>L. sajor-caju</i>, specifically its antioxidant, antibacterial, and anti-inflammatory effects. A hydroethanolic extract was formulated using dried basidiocarps, which exhibited a high phenolic content of approximately 14% and a flavonoid content of approximately 2.7%. The extract demonstrated significant antioxidant potential in <i>in vitro </i>reactions. The extract is sufficiently capable of scavenging free radicals (DPPH and ABTS) and chelate Fe<sup>2+</sup> with EC<sub>50</sub> values spanning from 186 to 390 μg/mL. In addition, considerable antimicrobial activity against tested pathogenic microorganisms was observed, as indicated by low MIC<sub>50</sub> values (256-358 μg/mL). Moreover, the fraction was found to prevent heat-induced protein denaturation which signifies its anti-inflammatory potential. When tested on the RAW 264.7 cell line, reduction in the nitrite production, and downregulation of COX-2 and iNOS mRNA expression was observed which are the key regulator of inflammatory signalling systems. The study, therefore, recommends the use of <i>L. sajor-caju</i> in the medical and pharmaceutical industries for the benefit of humanity.