In order to exploit and utilize peanut industry resources and produce additional high value products, the use of microwave-assisted technology for extracting water soluble dietary fiber (SDF) from peanut hull was investigated. The factors that influence the SDF extraction were studied via response surface methodology. Regression models for the relationships between these factors and SDF extraction yield as well as the percentage content of non-starch polysaccharides (NSP) were established. The optimum parameters were a liquid-to-solid ratio of 1:16, microwave power of 700W, heating time of 6min, and heating temperature of 90°C. Under these conditions, the SDF extraction yield and NSP percentage content reached 2.68% and 56.06%, respectively. The IC50 values for SDF scavenging of hydroxyl free radicals, superoxide anion free radicals, and DPPH free radicals were 0.78 mg/mL, 6.66 mg/mL, and 5.12 mg/mL, respectively. Moreover, the iron and molybdenum reduction capacities were similar to 8.015 μg/mL and 28.505 μg/mL ascorbic acid reduction capacities, respectively.