Sappan wood (Caesalpinia sappan) is a tropical hardwood tree found in Southeast Asia. Sappan wood contains a water-soluble compound, which imparts a red color named brazilin. Sappan wood is utilized to produce dye for fabric and coloring agents for food and beverages, such as wine and meat. As a valuable medicinal plant, the tree is also known for its antioxidant, anti-inflammatory, and anticancer properties. It has been observed that sappan wood contains various bioactive compounds, including brazilin, brazilein, sappan chalcone, and protosappanin A. It has also been discovered that these substances have various health advantages; they lower inflammation, enhance blood circulation, and are anti-oxidative in nature. Sappan wood has been used as a medicine to address a range of illnesses, such as gastrointestinal problems, respiratory infections, and skin conditions. Studies have also suggested that sappan wood may have anticarcinogenic potential as it possesses cytotoxic activity against cancer cells. Based on this, the present review emphasized the different medicinal properties, the role of phytochemicals, their health benefits, and several food and nonfood applications of sappan wood. Overall, sappan wood has demonstrated promising medicinal properties and is an important resource in traditional medicine. The present review has explored the potential role of sappan wood as an essential source of bioactive compounds for drug development.