Blumea lacera (Burm.f.) DC., popular for its traditional use in different diseases, was employed in phytochemical and biological investigations. The chemical studies led to the isolation of acyclic diterpene-phytol (1) along with two fatty acids-linolenic acid (2) and oleic acid (3). All the structures were determined by 1H NMR spectroscopic analysis and first time reported from this plant. Different fractions of crude methanol extract were subjected to antioxidant, cytotoxicity, antimicrobial, and antidiarrheal assays. The molecular docking studies have been implemented using PyRx, UCSF Chimera, Discovery Studio, and online tools. In addition, The ADME/T analysis and PASS prediction were implemented by using PASS online tools. In the molecular docking study of antioxidant, cytotoxicity, antimicrobial, and antidiarrheal activity, the compounds showed strong binding affinity ranging from −4.5 to −6.2 kcal/mol. Again, all three isolated compounds met the preconditions of Lipinski’s five rules for drug discovery. In DPPH free radical scavenging assay, the pet-ether and chloroform soluble fraction showed noteworthy antioxidant activity sowing promising IC50 values (10.76 μg/ml and 11.77 μg/ml, respectively), compared to the standard (6.05 μg/ml) with a total phenolic content range of 7.33–40.33 mg of GAE/gm. The pet-ether soluble fraction revealed substantial cytotoxicity showing an LC50 value of 1.03 μg/ml, compared to the standard (0.93 μg/ml). Besides, ethyl acetate soluble fraction showed moderate activity against both Gram-positive and Gram-negative bacteria, while both ethyl acetate and pet-ether soluble fraction showed excellent dose-dependent antidiarrheal activity.