Lemon peel extract is a natural source of improving biologically and physiological functions. The aim of this study is to evaluate antioxidant, phenolic compounds, cytotoxicity and antimicrobial potential of lemon peel water extracts. Fresh and dried lemon peel extracts at concentrations of 1,2 and 4% were used to enhance Labneh quality. The hemical, physical, rheological, microbiological and sensory properties of the tested samples were evaluated (at 5±1°C) after 30 days of storage. Dried lemon peel extract (DLPE) recorded high radical scavenging activity, total phenolic and flavonoids contents compared to fresh lemon peel extract (FLPE). Dried lemon peel extract has potent, also, antiproliferative effects with CC50 = 61.2 μg/ml which provided a promising approach to its safety. DLPE possessed a great antimicrobial activity against all tested microorganisms. Meanwhile, total solids, ash, fat and protein values were slightly affected by extracts addition in Labneh samples. Antioxidant activity was increased with increasing the concentration of lemon peel extracts. Control sample recorded the highest values of hardness, while cohesiveness, gumminess and chewiness values were gradually decreased with higher concentrations of lemon peel extracts till the end of storage period. Total bacterial counts of Labneh samples were increased, reached the maximum after 7 days of storage. Psychrophilic bacteria, Yeasts & moulds and coliform bacteria were not detected in processed Labneh up to 3 weeks of storage period. The addition of lemon peel water extracts (fresh or dried up to 4%) improved Labneh flavor, body & texture and appearance at 5±1°C for 30 days of storage.