In this comprehensive screening study, the chemical composition, and cytotoxic, antimicrobial, and anticholinergic activities of the green algae Penicillus capitatus, collected from Antalya-Türkiye, were determined as in vitro and in silico. GC-MS analysis of the hexane extract revealed a high content of fatty acids, with hexadecanoic acid constituting half of the total fatty acid content. LC-HRMS analysis of the DCM:MeOH extract identified ascorbic acid as the most abundant compound, followed by (-)-epigallocatechin and salicylic acid. The DCM:MeOH extract exhibited potent cytotoxicity against MDA-MB-231 and MCF7 breast cancer cell lines, outperforming doxorubicin with lower IC50 values and a higher selectivity index. Additionally, the extract demonstrated significant antimicrobial activity against Staphylococcus aureus, Escherichia coli, and Candida albicans, along with selective inhibition of acetylcholinesterase (hAChE) over butyrylcholinesterase (hBChE). Molecular docking and dynamics studies revealed that apigenin-7-O-glucoside and epigallocatechin form stable interactions with estrogen receptor alpha (ERα) and hAChE, suggesting their potential as inhibitors. In silico ADME studies indicated favorable pharmacokinetic profiles for the detected compounds, supporting their potential as drug candidates. The promising cytotoxic activity of the P. capitatus extracts, coupled with significant antimicrobial properties and selective hAChE inhibition, highlights their therapeutic potential for breast cancer treatment, infection management, and neurodegenerative disease intervention.