Alfalfa polysaccharides (AP) receive wide attention in the field of medicine, because of their anti-inflammatory property. However, AP has high molecular weight and poor water solubility, resulting in low biological activity. We wanted to obtain highly bioactive alfalfa polysaccharides for further research. Herein, we successfully synthesized highly substituted sulfated alfalfa polysaccharides (SAP) via the chlorosulfonic acid (CSA)-pyridine (Pyr) method, which was optimized using response surface methodology (RSM). Under the best reaction conditions, that is, the reaction temperature, time, and ratio of CSA to Pyr being 55 °C, 2.25 h, and 1.5:1, respectively, the maximum degree of substitution of SAP can reach up to 0.724. Fourier transform infrared spectroscopy also confirmed the existence of sulfonic acid groups on SAP. Despite the increased average molecular weight of SAP, its water solubility is improved, which is beneficial for its biological activity. Further in vitro results showed that SAP exhibited better antioxidant activity and antibacterial ability than AP. Besides, the former can efficiently enhance the viability of oxidatively stressed intestinal epithelial cells compared with the latter. Furthermore, SAP has the potential to inhibit obesity. It is concluded that sulfation modification could improve the antioxidant, antibacterial, bovine intestinal epithelial cells’ proliferation-promoting, and the obesity inhibition abilities of AP. The improvement of AP biological activity may provide references for the utilization of plant extracts that have weaker biological activity.