AbstractThe present study was aimed at investigating the optimization of extraction variables for food grade quality agar from Gracilaria tenuistipitata, so far, the first study on Bangladeshi seaweed. Water (native)‐ and NaOH (alkali)‐pretreated agars were comparatively analyzed by several physicochemical parameters. All extraction variables significantly affected the agar yield in both extraction conditions. Alkali‐pretreated agar provided a better yield (12–13% w/w) and gel strength (201 g/cm2) in extraction conditions as followed by 2% NaOH pretreatment at 30°C for 3 h, seaweed to water ratio at 1:150, and extraction temperature at 100°C for 2 h. Gelling and melting temperatures, color, and pH values of both agars were found to be comparable with commercial agar. Significantly higher sulfate contents including organic and inorganic and total carotenoids were reported in native (3.14% and 1.29 μg/mL) than that in alkali‐pretreated agar (1.27% and 0.62 μg/mL). FTIR spectrum demonstrated the purity of the agar as characterized by the stronger relative intensity with higher degree of conversion of L‐galactose 6‐sulfate to 3,6‐anhydrogalactose in alkali pretreatment group than that of native ones. Moreover, antioxidant activity (% DPPH scavenging) was observed and confirmed by IC50 values of 5.42 and 9.02 mg/mL in water‐ and alkali‐pretreated agars, respectively. The results suggested that agar from G. tenuistipitata with optimized alkali extraction conditions could promote cost‐effective yield with improved physicochemical characteristics and biofunctional values upon consumption by the consumers as food materials.