Peganum harmala (P. harmala) belongs to the family Zygophyllaceae, and is utilized in the traditional medicinal systems of Pakistan, China, Morocco, Algeria, and Spain to treat several chronic health disorders. The aim of the present study was to identify the chemical constituents and to evaluate the antioxidant, anti-inflammatory, and toxicity effects of P. harmala extracts both in vitro and in vivo. Sequential crude extracts including 100% dichloromethane, 100% methanol, and 70% aqueous methanol were obtained and their antioxidant and anti-inflammatory effects evaluated both in vitro and in vivo. The anti-inflammatory effect of the extract was investigated using the carrageenan-induced paw edema method in mice, whereas the toxicity of the most active extract was evaluated using an acute and subacute toxicity rat model. In addition, we have used the bioassay-guided approach to obtain potent fractions, using solvent–solvent partitioning and reversed phase high performance liquid chromatography from active crude extracts; identification and quantification of compounds from the active fractions was achieved using electrospray ionization mass spectrometry and high performance liquid chromatography techniques. Results revealed that the 100% methanol extract of P. harmala exhibits significant in vitro antioxidant activity in DPPH assay with an IC50 of 49 µg/mL as compared to the standard quercetin with an IC50 of 25.4 µg/mL. The same extract exhibited 63.0% inhibition against serum albumin denaturation as compared to 97% inhibition by the standard diclofenac sodium in an in vitro anti-inflammatory assay, and in vivo anti-inflammatory against carrageenan-induced paw edema (75.14% inhibition) as compared to 86.1% inhibition caused by the standard indomethacin. Furthermore, this extract was not toxic during a 14 day trial of acute toxicity when given at a dose of 3 g/kg, indicating that the lethal dose (LD50) of P. harmala methanol extract was greater than 3 g/kg. P. harmala methanolic fraction 2 obtained using bioassay-guided fractionation showed the presence of quinic acid, peganine, harmol, harmaline, and harmine, confirmed by electrospray ionization mass spectrometry and quantified using external standards on high performance liquid chromatography. Taken all together, the current investigation further confirms the antioxidant, anti-inflammatory, and safety aspects of P. harmala, which justifies its use in folk medicine.