Lagerstroemia thorelli (L. thorelli) is a member of the Lythraceae family and has not been previously researched. Thus, this study aimed to investigate its unexplored potential and identify novel therapeutic prospects. This research evaluated antioxidant, antidiabetic, and cytotoxic potentials along with compound characterization of the ethanolic leaf extract of L. thorelli. The antioxidant potential was assessed using 1, 1‐diphenyl‐2‐picrylhydrazyl (DPPH) free radical and hydrogen peroxide (H2O2) scavenging assays, total antioxidant capacity (TAC), total phenolic content (TPC), total flavonoid content (TFC) determination, antidiabetic property was assessed using α‐amylase inhibition, and the cytotoxic effect was examined on HeLa and Vero cells using MTT colorimetric assay. Chemical characterization was performed using gas chromatography‐mass spectrometry (GC‐MS). The findings demonstrated strong antioxidant, strong antidiabetic, and moderate cytotoxic activities. Comprehensive phytochemical analysis revealed its abundance in flavonoids, phenols/phenolics, tannins, glycosides, steroids, resin, etc. GC‐MS analysis of the L. thorelli extract identified 80 important compounds including cis‐11‐eicosenamide, beta‐D‐glucopyranoside, methyl‐, alpha‐D‐glucopyranoside, methyl‐, phthalic acid, gamma‐sitosterol, phytol, silicic acid, squalene, butanoic acid, cyclobarbital, etc. which are well‐documented for their antioxidant, antidiabetic, and anticancer effects. Thus, it can be inferred that L. thorelli could hold new promises in treating diseases like diabetes and free radical‐induced conditions, including neurodegenerative diseases.