Response surface methodology was employed to optimise the process parameters for subcritical water extraction of soluble dietary fibre (SDF) from defatted coconut flour. The obtained model was applied to predict the optimum response values and verified by validation experiment. The composition, structure, properties and bioactivities of the extracted SDF were studied. Effects of extraction temperature, extraction time, solid-liquid ratio and mesh number on the yield of SDF were investigated. The extraction at 140°C for 30 min, a solid-liquid ratio of 1:30, and a mesh number of 80 resulted in the extraction rate of SDF of 14%. Moreover, monosaccharide analysis indicated that SDF primarily contains mannose and galactose respectively. As indicated by X-ray diffraction and thermal analysis, SDF has low degree of crystallinity and high thermal stability. Additionally, SDF has high water holding, oil holding and swelling capacities, while exhibits high antioxidant activity against DPPH, ABTS + and˙OH radicals, as well as high in vitro hypoglycaemic activity. The SDF also exhibits good biofunctions, such as good toxic ions and bile acid salts adsorption. This study demonstrates that defatted coconut flour, which is an inexpensive source of natural dietary fibre, can be suitably used as a functional food ingredient in the food industry.