This study examined the functionalization of graphene with easily ionizable elements, such as lithium, and subsequently its interaction with the biopolymer sodium alginate (SA), to highlight its potential for biomedical applications. Utilizing Density Functional Theory (DFT), the research comprehensively investigated the structural, electronic, and spectroscopic properties of these graphene-based composites. The electronic properties of functionalized graphene were investigated using DFT at the B3LYP/6-31G(d,p) level. Among the various configurations studied, graphene exhibited weak interaction with two lithium atoms, displaying the highest reactivity in terms of total dipole moment (TDM) at 5.967 Debye and a HOMO/LUMO energy gap (ΔE) of 0.748 eV. Electrostatic potential mapping revealed that graphene when enhanced with lithium and three units of SA, exhibited an augmented potential density on its surface, a finding corroborated by other investigated physical properties. Notably, the configuration of graphene/3SA/Li, with weak interaction occurring at two side carbons, demonstrated the highest reactivity with a TDM of 15.509 Debye and ΔE of 0.280 eV. Additionally, a shift in the spectral characteristics of graphene towards lower wavenumbers was observed as lithium and SA interacted with the graphene substrate. The PDOS plot for Graphene/3SA/Li, showed the highest contribution in the HOMO orbitals was equally from lithium, sodium, hydrogen, and oxygen, while the lowest contribution was from carbon. This computational analysis provides comprehensive insights into the functionalized graphene systems, aiding in their further development and optimization for practical biomedical use.