Porphyridium aerugineum is a unicellular freshwater red microalga that synthesizes and secretes into the culture medium an extracellular polysaccharide (EPS). In this study, algal growth and polysaccharide production, as well as the antioxidant capacity and antitumor effect of Porphyridium aerugineum EPS (PaEPS), were investigated. Cultivation of the microalgae was carried out in a photobioreactor under controlled conditions. Algal growth and the amount of EPS were monitored daily. The accumulated polysaccharide was extracted and lyophilized. At the end of cultivation, the concentration of microalgal biomass and PaEPS reached 3.3 and 1.2 g L−1, respectively. To examine the antioxidant capacity of PaEPS, FRAP and ABTS assays were performed. The cytotoxic activity of PaEPS was evaluated on the tumor cell lines MCF-7 (breast cancer) and HeLa (cervical adenocarcinoma) and on BJ (a non-tumor human skin fibroblast cell line), using MTT assay. The results obtained indicated that P. aerugineum polysaccharide exhibited a high ABTS radical-scavenging activity reaching up to 55%. The cytotoxic effect was best expressed in MCF-7 cells treated for 72 h with 1000 µg/mL PaEPS, where tumor cell proliferation was inhibited by more than 70%. Importantly, the PaEPS treatments did not significantly affect the viability of BJ cells. These findings promote the biotechnological production of P. aerugineum extracellular polysaccharide and reveal its potential as an anticancer and antioxidant agent for future applications.