The development of genetically engineered cell cultures has been suggested as a potential approach for the production of target compounds from medicinal plants. In this study, we generated PAP1 (production of anthocyanin pigment 1)-overexpressing ginseng (Panax ginseng C.A. Meyer) hairy roots to improve the production of anthocyanins, as well as the bioactivity (e.g., antioxidant and whitening activities) of ginseng. Based on differentially expressed gene analysis, we found that ectopic expression of PAP1 induced the expression of genes involved in the ‘phenylpropanoid biosynthesis’ (24 genes), and ‘flavonoid biosynthesis’ (17 genes) pathways, resulting in 191- to 341-fold increases in anthocyanin production compared to transgenic control (TC) hairy roots. Additionally, PAP1-overexpressing ginseng hairy roots exhibited an approximately seven-fold higher DPPH-free radical scavenging activity and 10-fold higher ORAC value compared to the TC. In α-melanocyte-stimulating hormone-stimulated B16F10 cells, PAP1-overexpressing ginseng hairy roots strongly inhibited the accumulation of melanin by 50 to 59% compared to mock-control. Furthermore, results obtained by quantitative real-time PCR, western blot, and tyrosinase inhibition assay suggested that the anti-melanogenic activity of PAP1-overexpressing ginseng hairy roots is mediated by tyrosinase activity inhibition. Taken together, our results suggested that the ectopic expression of PAP1 is an effective strategy for the enhancement of anthocyanin production, which improves the biological activities of ginseng root cultures.