Herein, the purification of the water-soluble yellow Monascus pigment from fermentation broth using the LX3020 resin is reported. The resin adsorbed the pigment via chemisorption involving hydrophobic and electrostatic interactions. The optimal operating conditions for the dynamic separation of pigment are 25 °C, a feed solution pH of 4.0, 70% (v/v) ethanol as eluent, and an adsorption and elution flow rate of 1 B V/h. The purity and recovery rate of this pigment were 100% and 22.4%, respectively. Antioxidant activity assays showed that the antioxidant capacity of the pigment (2.5 mg/mL) reached 64.2% of that of vitamin C units. Its free radical scavenging capacity is good, and it can protect against H2O2-induced cell oxidative injury with no cytotoxicity. Therefore, utilization of this pigment (120 mg/100 g) to manufacture functional rice noodles with improved texture qualities and sensory indexes. The degree of rice noodle contamination decreased by ∼90% after cultivation for 48 h. These results reveal that yellow Monascus pigment could play an important role in the preparations of functional foods.