The aerial parts of the Argy Worm Wood (AWW) plant have been used in different Chinese foods as a colorant and a taste enhancer for a long time. Despite its application as a food colorant, it has rarely been considered for the coloration of textiles. Keeping in mind the variation in color strength due to the change in phytochemical contents by seasonal change and other variables, the extraction of AWW aerial parts was optimized using the Taguchi method. Optimization was performed on the basis of total phytochemical contents (phenols, flavonoids, and tannins) in the extracted solutions. For this purpose, two different solvent systems, namely sodium hydroxide/water (NaOH/water) and ethanol/water (EtOH/water), were applied through a simple aqueous extraction method at varying levels of solvent concentration, and extraction temperature and duration. Maximum phytochemicals yield of 21.96% was obtained using NaOH/water system with 9 g/L NaOH/water at 85 °C for 20 min and 25.5% with 75% aqueous ethanol at 85 °C for 40 min. Optimized extracts were characterized by UV-Vis and FTIR spectrophotometry, which showed the presence of multiple phytochemicals in the extracts. The dyeing temperature and time were also optimized. Dyed cotton fabrics showed medium to high colorfastness to washing and excellent antibacterial and UV radiation absorption properties. The effect of pre-mordanting with salts of iron and copper was also studied on the color fastness properties. Cotton fabrics dyed with two different solvent system extracts displayed various shades of brown with NaOH/water, and green with aqueous ethanol with and without pre-mordanting. The present study provides the textile industry with a promising source of functional bio-colorant and a value-adding approach for the AWW plant industry.