Sulfated polysaccharides from algae exhibit bioactivities and offer various health benefits. However, high molecular weight often restricts the bioavailability of these natural products. Polysaccharides with lower molecular weight, on the other hand, play a crucial role in enhancing various bioactive properties, including antioxidant activity, tyrosinase inhibition, cell proliferation, and more. The goal of this study was to produce a series of medium and lower molecular weight (Mw) ι-carrageenan samples and evaluate their bioactive potential. The ι-carrageenan samples with varying degradation levels and polydispersities were obtained after enzymatic treatment using a ι-carrageenase obtained from the marine bacterium Cellulophaga baltica. Compared to the non-degraded ι-carrageenan (I-0), the most degraded sample (I-5) showed 2.5 and 1.5 times higher antioxidant activities and inhibition of tyrosinase enzyme, respectively. Anticoagulant activity dropped by 1.8 times after 1200 min enzymolysis. The cell viability of I-5 treated RAW 264.7 cells was enhanced up to 140.6 ± 3.4% in comparison to the non-degraded one, while the highest proliferation rate was observed on I-5 treated both RAW267.4 and HaCaT cells. In addition, I-5-treated RAW264.7 cells showed the highest amount of Nitric oxide (NO) reduction, indicating a beneficial effect on inflammation. HaCaT cells treated with I-5 could migrate almost 90% of the wound area within 24 h compared to I-0, and the scratch area was completely closed at 48 h. A lower inflammation rate and higher HaCaT cell proliferation rate in I-5 displayed the ideal characteristics of wound healing material. These findings indicate that enzyme-degraded ι-carrageenans could be promising therapeutic agents in the cosmeceutical and pharmaceutical industries.