In the field of heterocyclic compounds, the spiro-pyrrolidine and oxindole ring systems are highly esteemed due to their distinctive structural scaffold that is present in numerous pharmacologically significant alkaloids. Interdisciplinary research has been increasingly important in recent years for deciphering the intricate characteristics and behaviors of novel organic compounds. The current work uses quantum chemical computational techniques to study the structural stability and nonlinear optical (NLO) activity of (1′R,3S,3′R)-1'-(4-chlorobenzoyl)-5′,6′,7′,7a′-tetrahydro-1′H dispiro[indoline-3,2′-pyrrolizine-3′,3″-indoline]-2,2″-dione (DSOIP-Cl). The study combines molecular biology, computational chemistry, and theoretical chemistry knowledge to create a comprehensive picture of this fascinating organic compound. This study employed the density functional theory (DFT) B3LYP method to compute the electronic properties and molecular geometry. The basis set for the computations was 6–311++G(d,p). The IEFPCM solvation method is used to investigate the behavior of the head compound in different solvents. Understanding the interaction between organic compounds and the solvent phase is crucial because the majority of interactions in biological systems occur in solution. UV–Vis spectral analysis of the molecule in different solvents is performed using the TD-DFT method. The compound exhibits more excellent absorption in polar solvents such as water, while its absorption is lower in the gaseous phase. Assessing NLO properties revealed optoelectronics applications. DSOIP-Cl has 5.25 times the first-order hyperpolarizability of urea. Different solvents have higher dipole moments and first-order hyperpolarizability than gases. To identify the inter- and intramolecular charge transfer interactions, intermolecular hydrogen bonding, and hyperconjugative interactions that stabilize the structure, natural bond orbital (NBO) analysis is performed. A stabilization energy of 9.99 kcal/mol is obtained for π(C32–C33) → σ*(C33–C34) due to strong intramolecular hyperconjugative interactions. Frontier molecular orbital (FMO) analysis helps determine the global reactivity parameters and the charge transfer interaction. The van der Waals interaction and steric effect within the molecule are identified using RDG analysis. The pharmacokinetic properties, adherence to drug-likeness criteria, and easily controllable synthesis process were evaluated through ADME analysis, establishing it as an up-and-coming candidate for subsequent drug development. Ultimately, to determine the biological activity and the ability of the title compound to inhibit aldose reductase, a series of computational techniques are employed, including molecular docking study, molecular dynamic (MD) simulation, and MM-PBSA binding energy calculations. −7.86 kcal/mol was reported as the docking score. Hydrophobic interactions play an essential role in the efficiency of protein-ligand binding. The remarkable energetic contribution of DSOIP-Cl to the MM-PBSA binding dynamics highlights its unique association with the AR protein, with a binding energy of −79.81 kJ/mol.