During our search for novel bioactive compounds from extremophilic actinomycetes, the new Streptomyces griseorubens sp. ASMR4 was isolated from a soft coral collected in the Red Sea at the Hurghada coast, Egypt, and characterized taxonomically. It was fermented on large scale using a modified solid rice medium as the first example for actinomycetes so far. Work-up and purification of the strain extract using different chromatographic techniques afforded the new oxaphenalene derivative, 8-hydroxy-2-(2-hydroxypropyl)-7-acetyl-1-oxaphenalene ( 1a ), together with seven known metabolites: ferulic acid ( 2 ), glycerol linoleate, linoleic acid methyl ester, (3 R ,4 R )-3,4-dihydroxy-3-methylpentan-2-one/(3 S ,4 R )-3,4-dihydroxy-3-methylpentan-2-one, anthranilic acid, phenylacetic acid, and benzoic acid. The chemical structure of the new compound ( 1a ) was confirmed by extensive 1D and 2D NMR spectroscopy, high-resolution electron impact mass measurements, and by comparison with literature data. The antimicrobial activity of the strain extract and compounds 1a and 2 were studied using a panel of pathogenic microorganisms. The in vitro cytotoxicity of the bacterial extract was studied against the human cervix carcinoma cell line (KB-3-1) and its multi-drug-resistant subclone (KB-V1).