The preparation, quantification, and characterization of flavonoid compounds from Chinese water chestnut peel (CWCP) flavonoid extract and ethyl acetate fraction (EF), n-butanol fraction, and water fraction were studied. Among these, EF showed the maximum free radical levels (IC values of 0.36, 0.40, and 0.37 mg/mL for DPPH•, ABTS• , and •OH, respectively), nitrite scavenging effects (IC = 1.89 mg/mL), and A549 cell inhibitory activities (IC = 776.12 μg/mL) with the highest value of total flavonoid content (TFC, 421.32 mg/g). Moreover, the contents of 8 flavonoids in this fraction were quantified using high-performance liquid chromatography, and fisetin, diosmetin, luteolin, and tectorigenin were the 4 major flavonoids with levels of 31.66, 29.91, 13.69, and 12.41 mg/g, respectively. Luteolin produced a greater inhibition of human lung cancer A549 cells (IC = 59.60 μg/mL) than did fisetin, diosmetin, and tectorigenin. Flow cytometry revealed that the cellular mechanisms of luteolin inhibition of A549 cells were achieved via the induction of cell proliferation arrest at G phase and apoptosis/necrosis. Our findings suggest that flavonoids are closely associated with antitumor, antioxidant, and nitrite scavenging effects of CWCP.