The ability of Bacillus subtilis to produce flavor from microbial fermentation of sugar beet pulp was evaluated and the effect of encapsulation on the quality of the flavor produced was investigated and add it to a flavored soft drink. The flavor was subjected to cytotoxicity testing and the antioxidant, anticancer, antiviral and antimicrobial properties of extract from sugar beet pulp supplemented with a mixture of LـLysine and Yeast extract fermented by Bacillus subtilis NRCR22 using in vitro methods. Gas chromatography–mass spectrometry analysis of sugar beet pulp fermented with Bacillus subtilis NRCH-123 and Bacillus subtilis NRCR22 identifed 30 compounds with 2,6-ditert-butyl-4-methylphenol (97.88%) and 8 compounds with limonene (99.74%) as main constituents, respectively. The antioxidant activity of BLY2 extract was 66.02% at a concentration of 100µg/ml. The concentration of extract required to inhibit 50% cell viability when assessed against human liver cancer cell line HepG2 and the cytotoxicity were 0.20 µg/mL and 3.47 µg/ml respectively, indicating strong anti-cancer activity and at the same time safe on normal cells. The soft drink flavored with the natural, microbially produced flavor was more sensory palatable than the artificially flavored soft drink.