Water‐soluble polysaccharides (WSP) were secluded from Tamarindus indica (TWSP) and Pithecellobium dulce (PWSP) seeds by hot water method. The physico‐chemical properties revealed that the polysaccharides might be used as a potential food additive. The micrometric properties of TWSP and PWSP possessed a bulk density of 0.64 and 0.68 g/ml, respectively. The isolated polysaccharides were subjected to Fourier transform infrared spectroscopy and Nuclear magnetic resonance spectroscopy for its compositional analysis and exhibited that both the isolates are heteropolysaccharides. The spectra of both the mucilages were resonating at δ 3.00–δ 5.00 ppm which confirmed the presence of polysaccharides. Thermo gravimetric analysis showed that the isolated polysaccharides were thermally stable. Scanning electron microscopy and X‐ray diffraction depicted the morphological characteristics. The radical scavenging ability and antibacterial activity proved that the polysaccharides can be explored as a functional food ingredient. Furthermore, the prebiotic potential of polysaccharides stimulated the growth of Lactobacillus delbrueckii and Lactobacillus fermentum over inulin. Practical applications The study provides optimum extraction conditions to obtain TWSP and PWSP seeds using response surface methodology. The isolated polysaccharides can be used as therapeutic agent and as a food additive due to its high purity obtained from Fourier transform infrared spectroscopy and Nuclear magnetic resonance spectroscopic analysis. The excellent flowability and compressibility of polysaccharides can be applied in pharmaceutical formulation as an excipient. The active component present in the isolated polysaccharides can be used as a food preservative. The supplement of TWSP and PWSP as a carbon source accelerated the growth of probiotics which could be used as natural prebiotics. Thus the study concluded that the water‐soluble polysaccharide obtained from the agro‐industrial by product has the wide application in food and pharmaceutical industries.