The objective of the present investigation was to identify and characterize the pigment produced by yeast strain Rhodotorula mucilaginosa (MTCC-1403) using food industry residues. Onion peel powder and Mung bean husks were explored as substrate for submerged fermentation at previously optimized conditions in 3-L bioreactor. The pigment extraction was followed by quantification and characterization in terms of UV-visible spectroscopy, Fourier transform infrared spectroscopy, high performance liquid chromatography and fluorescence spectroscopy. Anti-carcinogenic activity of extracted pigment was measured against MCF-7 breast cancer cells. Furthermore, the pigment was used for the development of confectionary products (hard boiled candy and jelly) at different concentrations to evaluate its influence on bioactive properties and functionality. UV-visible spectroscopic reports revealed that torularhodin, b-carotene, and torulene were major carotenoids present. In case of anti-carcinogenic activity, cell inhibition of 21.21% was observed with 40 lg of the extracted pigment after 72 h of incubation against MCF-7 cells. Significant influence of extracted pigment on confectionary products was observed for antioxidant activity, carotenoid content, color profile and sensory evaluation.