The marine environment harbours a rich diversity of microorganisms capable of producing bioactive compounds, including pigments with significant therapeutic potential. However, the exploration of bacterial pigments from marine bacteria, particularly from Cox’s Bazar region in Bangladesh, remains under-researched. This study investigated the antibacterial and cytotoxic properties of two yellow pigment-producing bacteria, Pseudomonas aeruginosa strain BDIFST240011 and Microbacterium hominis strain BDIFST240012, isolated from sediment samples of the Bay of Bengal. The microbial load was assessed, and the isolates were characterized morphologically, molecularly (16S rRNA sequencing), and biochemically to confirm their identities. Pigment production was optimized under various growth conditions, with Luria–Bertani medium supplemented with seawater providing optimal results. The pigments, pyocyanin from P. aeruginosa and pyoverdine from M. hominis, were characterized using UV-visible and Fourier Transform Infrared (FTIR) spectroscopy, confirming their chemical identities. Antibacterial activity was evaluated through agar well diffusion, revealing significant inhibition of Bacillus subtilis and other bacterial strains, with pyocyanin showing stronger efficacy. The cytotoxic effects of both pigments were assessed using the MTT assay, showing a dose-dependent reduction in Vero cell viability, with pyocyanin exhibiting more significant cytotoxicity. This research addresses the gap in marine bacterial pigment studies and highlights their potential for pharmaceutical applications. The findings suggest that marine-derived bacterial pigments can serve as a source of novel antibacterial agents and provide a foundation for future research into their clinical and industrial applications. Future studies should focus on elucidating the mechanisms of action and exploring the broader therapeutic uses of these pigments.