Multidrug resistance is an increasing threat to current antimicrobial therapies, requiring new classes of antimicrobial agents. Mangroves are highly diverse ecosystems that are promising sources of bioactive compounds. In this study, we isolated and characterised an antimicrobial peptide-producing microorganism from mangrove sediment in Kerala, India and assessed its antimicrobial and anticancer potentials. Strains with the most potent antimicrobial activity were further analysed to determine the nature of the antimicrobial compound. The antimicrobial peptide was purified and characterised using mass spectrometry. Among the isolated microbes, strain P3 demonstrated the most potent antimicrobial effect, identified as peptide-based. Purification and mass spectrometry analysis revealed a novel peptide (PAP3) with a molecular weight of 1878.16 Da, composed predominantly of hydrophobic and positively charged amino acids. PAP3 also exhibited anticancer activity against the A549 lung cancer cell line. A dose-dependent reduction in viability was observed with an IC50 of 24.67 μg/mL, accompanied by typical morphological features of apoptosis. Strain P3 was identified as Pseudomonas aeruginosa using 16S rRNA gene sequencing. Whole-genome sequencing revealed the presence of PAP3. Mass spectrometry combined with in silico analysis identified PAP3 as a 16-amino-acid peptide (AFLSQLKQLDELIKSF) with a monoisotopic mass of 1878 Da, exhibiting typical AMP physicochemical characteristics, including amphipathicity, moderate hydrophobicity and a predicted α-helical structure. These findings highlight PAP3 as a novel dual-activity peptide with both antimicrobial and anticancer potential derived from a mangrove-associated microorganism.