Andrographis paniculata extract is traditionally used as a medicine to treat different diseases in India, China and Southeast Asia. In the present study, we evaluated the anticancer and immunomodulatory activity of the methanolic extract of Andrographis paniculata in human cancer and immune cells. The methanolic extract of Andrographis paniculata was fractionated into dichloromethane, petroleum ether and aqueous extracts and screened for bioactivity. Our results indicate that the dichloromethane fraction of the methanolic extract retains the active compounds contributing for both the anticancer and immunostimulatory activity. Dichloromethane fraction significantly inhibits the proliferation of HT-29 (colon cancer) cells and augments the proliferation human peripheral blood lymphocytes (HPBLs) at low concentrations. On further fractionation of the dichloromethane extract we could isolate three diterpene compounds, i.e.  andrographolide,  14-deoxyandrographolide and  14-deoxy-11,12-didehydroandrographolide. Andrographolide showed anticancer activity on diverse cancer cells representing different types of human cancers. Whereas all the three molecules showed enhanced proliferation and interleukin-2 (IL-2) induction in HPBLs.