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Cancer is one of the major causes of death, and its negative impact continues to rise globally. Chemotherapy, which is the most common therapy, has several limitations due to its tremendous side effects. Therefore, developing an alternate therapeutic agent with high biocompatibility is indeed needed. The anti-oxidative effects and bioactivities of several different crude extracts of marine algae have been evaluated both in vitro and in vivo. In the present study, we synthesized the aqueous extract (HA) from the marine algae Amphiroa anceps, and then, a liposome was formulated for that extract (NHA). The extracts were characterized using different photophysical tools like dynamic light scattering, UV–visible spectroscopy, FTIR, scanning electron microscopy, and GC-MS analysis. The SEM image revealed a size range of 112–185 nm for NHA and the GC-MS results showed the presence of octadecanoic acid and n-Hexadecanoic acid in the majority. The anticancer activity was studied using A549 cells, and the NHA inhibited the cancer cells dose-dependently, with the highest killing of 92% at 100 μg/mL. The in vivo studies in the zebrafish model showed that neither the HA nor NHA of Amphiroa anceps showed any teratogenic effect. The outcome of our study showed that NHA can be a potential drug candidate for inhibiting cancer with good biocompatibility up to a dose of 100 μg/mL. [ABSTRACT FROM AUTHOR]