Virgin coconut oil (VCO) has gained attention as a functional food ingredient due to its unique fatty acid profile, particularly medium-chain fatty acids (MCFAs), and minor bioactive compounds. This review synthesizes recent preclinical and clinical evidence on the biological activities, safety, and functional food applications of VCO. Experimental studies report antioxidant, anti-inflammatory, antimicrobial, metabolic, and skin-protective effects, mediated through modulation of oxidative stress, inflammatory signaling pathways (including NF-κB and Nrf2), lipid metabolism, and cellular barrier functions. Human studies suggest potential benefits related to antioxidant status, inflammatory modulation, metabolic regulation, and skin health, although outcomes vary with study design and intake levels. Technologically, VCO shows strong potential in food systems by enhancing oxidative stability, texture, and bioactive delivery in oleogels, emulsions, and encapsulated formulations. Overall, this review integrates mechanistic and applied evidence, highlighting VCO as a multifunctional ingredient while emphasizing the need for robust clinical trials and optimized delivery strategies.