Sponge-associated bacteria represent a potential promising source for new bioactive compounds. These compounds can be useful for the development of new antimicrobial and anticancer agents. In the present study, the endosymbiotic bacteria associated with marine sponge species; Amphimedon ochracea, Hyrtios erecta, Amphimedon sp., Ircinia echinata, Ircinia muscarum and Ircinia fasciculate, collected from Hurghada, the Red Sea and Alexandria, the Mediterranean Sea, Egypt were screened for antimicrobial and cytotoxic activities. Seventeen bacterial crude extracts were tested for antimicrobial activities; five were the most potent. Two of these most promising bacterial extracts (R4 and R14) showed the highest activities. On the other hand, the crude extracts of the tested five bacterial extracts showed growth inhibition effects against the cancer cell lines [Hepatocellular carcinoma (HepG2), breast cancer (MCF7), and colon cancer (HCT)]. The bacterial isolate (R4) crude extract showed the most promising cytotoxic activity against MCF7 and HCT, while R14 showed the highest activity against HepG2. The bacterial species were identified based on the phylogenetic analysis of the nucleotide sequences of their 16S rDNA genes. The most potent bacterial isolate (R4) was identified as Bacillus gottheilii MSB1 by using conventional techniques and DNA sequencing of the 16S rRNA gene. The partial fractionation depending on the polarity n-hexane (H), dichloromethane (M), ethyl acetate (E), and n-butanol (B) yielded four cytotoxic-active fractions from Bacillus gottheilii MSB1 crude extract, the fraction M was the most promising one against HepG2, MCF7, and HCT, while fraction B showed a weak cytotoxic activity against different cell lines.