A number of biopigment applications in various industrial sectors are gaining importance due to the growing consumer interest in their natural origin. Thus, this work was conducted to valorize endophytic fungi as an efficient production platform for natural pigments. A promising strain isolated from leaves of Origanum majorana was identified as Monascus ruber SRZ112 produced several types of pigments. The nature of the pigments, mainly rubropunctamine, monascin, ankaflavin, rubropunctatin, and monascorubrin in the fungal extract was studied by LC/ESI–MS/MS analyses. As a first step towards developing an efficient production of red pigments, the suitability of seven types of agro-industrial waste was evaluated. The highest yield of red pigments was obtained using potato peel moistened with mineral salt broth as a culture medium. To increase yield of red pigments, favourable culture conditions including incubation temperature, incubation period, pH of moistening agent, inoculum concentration, substrate weight and moisture level were evaluated. Additionally, yield of red pigments was intensified after the exposure of M. ruber SRZ112 spores to 1.00 KGy gamma rays. The final yield was improved by a 22.12-fold increase from 23.55 to 3351.87 AU g−1. The anticancer and antioxidant properties of the pigment’s extract from the fungal culture were also studied. The obtained data indicated activity of the extract against human breast cancer cell lines with no significant cytotoxicity against normal cell lines. The extract also showed a free radical scavenging potential. This is the first report, to our knowledge, on the isolation of the endophytic M. ruber SRZ112 strain with the successful production of natural pigments under solid-state fermentation using potato peel as a substrate.