The bioactive properties of Kappaphycus alvarezii, red seaweed, were investigated. Water was the best solvent for extraction of seaweed and the aqueous seaweed extract (SWE) showed the highest yield, phenolic and flavanoid content. It exhibited good antioxidant activity as measured by DPPH assay, reducing power, iron chelating activity and β-carotene bleaching assay. SWE also showed antimicrobial activity against S aureus and B cereus. Composite films prepared using SWE and poly vinyl alcohol (PVA) showed excellent barrier properties against UV light. The films had good mechanical characteristics measured in terms of tensile strength, % elongation and puncture strength. SWE containing PVA films had low oxygen transfer, good antioxidant and antibacterial activity. Results demonstrated that SWE has good antioxidant and antibacterial activity and it could be used to prepare bioactive food packaging films useful for the food industry.