In the present study, we utilized Stevia rebaudiana L. (SRLe) extract to in situ biosynthesize nanoscale alpha hematite (α-Fe2O3) nanoparticles (NPs) with potent antioxidant, antimicrobial, and anticancer properties. SRLe-α-Fe2O3 was characterized using physiochemical analyses, including UV/Vis, FTIR, XRD, DLS, EDX, SEM, and TEM studies. Among tested solvents, CHCl3/MeOH (2:1 v/v) SRL extract (least polar solvent) contained the highest EY, TPC, and antioxidant capacity of ~3.5%, ~75 mg GAE/g extract, and IC50 = 9.87 ± 0.7 mg/mL, respectively. FTIR confirmed the engagement of coating operation to the colloidal α-Fe2O3 NPs. TEM, SEM, and DLS revealed that SRLe-α-Fe2O3 has a spherical shape, uniform size distribution with aggregation for an average size of ~18.34 nm, and ζ = −19.4 mV, forming a repulsive barrier that helped to improve stability. The synthesized nanoparticles displayed considerable antibacterial activity against E. coli and S. aureus bacterial growth, and exhibited superior activity against the A549 lung cancer cell lines. These findings indicate that the increased availability of bioactive substances with antioxidant properties of SRLe makes it a potentially interesting material for the preparation of biologically active compounds and green synthesis of nanoparticles.