Thraustochytrids are the most promising microbial source for the commercial production of docosahexaenoic acid (DHA) for its application in the human health, aquaculture, and nutraceutical sectors. The present study isolated 127 thraustochytrid strains from mangrove habitats of the south Andaman Islands, India to study their diversity, polyunsaturated fatty acids (PUFAs), and biotechnological potential. The predominant strains were identified as belonging to two major genera (Thraustochytrium, Aurantiochytrium) based on morphological and molecular characteristics. The strain ANVKK-06 produced the maximum biomass of 5.42 g·L⁻¹, while ANVKK-03 exhibited the maximum total lipid (71.03%). Omega-3 PUFAs such as eicosapentaenoic acid (EPA) accumulated up to 11.03% in ANVKK-04, docosapentaenoic acid (DPA) up to 8.65% in ANVKK-07, and DHA up to 47.19% in ANVKK-06. ANVKK-06 showed the maximum scavenging activity (84.79 ± 2.30%) while ANVKK-03 and ANVKK-10 displayed the highest antibacterial activity against human and fish pathogens, S. aureus (18.69 ± 1.2 mm) and V. parahaemolyticus (18.31 ± 1.0 mm), respectively. All strains were non-toxic as evident by negative blood agar hemolysis, thus, the thraustochytrids are suggested to be a potential source of DHA for application in the health care of human and fish.