High fat intake is associated with various health disorders. Therefore, there have been continued efforts to reduce the fat content in food products and replace it with various fat replacers. In the present study, the effect of black gram (Vigna mungo) flour (BGF) as a fat replacer in biscuits at different concentrations (10, 15, 20, 25, and 50% w/w) was explored. The proximate functional, rheological, microstructural, phytochemical, antioxidant, nutritional, and sensory properties of the flour and biscuits samples were evaluated. The inclusion of BGF in the formulation of biscuit altered dough rheology significantly (P ≤ 0.05). The gluten content of the flour blends decreases with the addition of BGF, while the increased water absorption (145.60–162.24%) increases in the gluten development time, and it was increased from 1.67 min for control (without BGF) to 11.50 min for 50% BGF substitution. Furthermore, the addition of BGF resulted in a significant (P ≤ 0.05) decrease in setback (958–162 cP) and breakdown (7561–894 cP) viscosities. The scanning electron microscopy of biscuits dough elaborated after fat replacement at different levels showing that evenly distribution of starch granule was disrupted, and the gluten matrix was often ruptured. Total phenolic content (TPC) and total flavonoid content (TFC) of flour samples increased from 16.73–177.16 mg Gallic acid/100 g dw and 18.56–421.60 mg Catechin/100 dw, respectively. Baking decreased the TPC, whereas TFC was increased in comparison to flour blends. Similarly, biscuits also showed an increment in their antioxidant activity. The crude fiber and protein contents of BGF-WF (Wheat flour) biscuits improved from 0.21 to 3.01% and 15.20 to 26.85%, respectively. Sensory and textural performance exhibited that the biscuits were acceptable for fat replacement up to 15% BGF. Based on this study, BGF may be promoted and commercialized as a highly antioxidative and nutritive edible flour, which can be prospectively used in the development of natural fat replacers, nutraceuticals, and functional foods. The current approach also enhances the economy of legumes processing industries by providing value to BGFs.