Seven known isoquinoline alkaloids 1–7 were isolated from the root extracts of Berberis parkeriana Schneid. Nine new derivatives 8–16 of one of the isolated compounds, jatrorrhizine (7), were synthesized. All the isolated as well as derivatized compounds were evaluated for their in-vitro acetylcholinesterase (AChE), and butyrylcholinesterase (BChE) inhibitory activity. Functionalized compounds selectively exhibited a potent-to-moderate activity with IC50 = 5.5 ± 0.3–124.5 ± 0.4 μM against butyrylcholinesterase enzyme. Among them, compound 15 was a potent BChE inhibitor (IC50 = 5.5 ± 0.3 μM), as compared to the standard drug galantamine hydrobromide (IC50 = 40.83 ± 0.37 μM). Active compounds were further subjected to kinetic, and molecular docking studies to predict their modes of inhibition, and interactions with the receptor (BChE), respectively. Enzyme kinetics studies showed that compounds 9 (IC50 = 25.3 ± 0.5 μM), and 14 (IC50 = 23.9 ± 0.5 μM) were non-competitive inhibitors, while compound 15 exhibited a competitive inhibition. In addition, these compounds were found to be non-cytotoxic against human fibroblast (BJ) cell line, except 9 (IC50 = 17.1 ± 1.0 μM), and 10 (IC50 = 18.4 ± 0.3 μM). Inhibition of cholinesterases is an important approach for development of drugs against Alzheimer’s disease, and thus discoveries presented here deserve further investigation.