In view of urgent need for effective herbal antibiotics, we have isolated, characterized, an effective antibacterial compound Dinoxin B withanolide from leaves of Datura inoxia to investigate its antibacterial potential against Staphylococcus aureus. The bactericidal efficacy of Dinoxin B withanolide was assessed on Staphylococcus aureus, using transmission and scanning electron microscopy. Its effect on DNA and protein was analyzed by the electrophoresis technique. In vitro and in vivo studies were performed to evaluate the cytotoxicity and anti-inflammatory nature of the compound. Electron microscopic study showed that Dinoxin B withanolide damaged bacterial cell wall and membrane. It also causes degradation to DNA and protein, resulting in bacterial death. This compound was found to be non-toxic even at higher concentrations. Treatment of Balb/c mice revealed the significant suppression of T cells by the Dinoxin B withanolide. In vivo and in vitro, studies confirm that Dinoxin B withanolide could be used as herbal antibiotics with bactericidal, anti-inflammatory, low toxicity and good shelf life.