This study was aimed to optimize mixtures of ashwagandha powder and giloy powder along with wheat flour for the production of sponge cake. Ashwagandha powder and giloy powder were applied 2 to 5% and 5 to 8%, and yogurt was used as fat‐replacer 50%. Optimization of the formulation was based on the sensory evaluation obtained through 9‐point Hedonic scale. The results revealed that sponge cake incorporated with 2% ashwagandha powder and 5% giloy powder, i.e. ashwagandha giloy fortified sponge cake (AGFSC‐I) was most appreciated by the tasting panel members with overall acceptability. Protein (%), fat (%), carbohydrates (%), energy (%), TPC (mg GAE/100 mg), TFC (mg QE/100 mg), and IC50 (mg/ml) value decreased during the storage period of 5 days, i.e. from 15.25 ± 0.03 to 13.15 ± 0.10; 12.44 ± 0.04 to 12.2 ± 0.16; 33.62 ± 0.31 to 31.99 ± 0.008; 307.44 ± 1.03 to 290.36 ± 0.96; 14.82 ± 0.13 to 7.694 ± 0.10; 5.111 ± 0.36 to 3.823 ± 0.08; and 13.82 ± 0.10 to 8.807 ± 0.08 respectively. Novelty Statement Wheat flour sponge cake was prepared with the incorporation of ashwagandha and giloy as AGsFSC. Yogurt was used in place of butter in order to prepare low‐fat AGFSC. Shelf‐life analysis was performed to study the stability of AGFSC for 5 days.