The present study described the characterization and biological properties of water‑soluble sulfated polysaccharides prepared from water‑insoluble polysaccharide (DIP), which were extracted from Dictyophora indusiata. The sulfation of DIP was performed using the chlorosulfonic acid‑pyridine method. The water solubilities of the sulfated derivatives were measured at room temperature according to the Chinese Pharmacopoeia. The scavenging activity of hydroxyl radicals and 1,1‑diphenyl‑2‑picrylhydrazyl (DPPH) as determined, together with the reduction ability of the sulfated polysaccharides. The cytotoxic and antiproliferative effects of DIP and the sulfated derivatives on MCF‑7 and B16 cells were then determined using an MTT assay. The substitution degrees of the sulfated polysaccharides were 0.584 (S1‑DIP), 0.989 (S2‑DIP) and 1.549 (S3‑DIP) according to barium chloride‑gelatin nephelometry. Infrared spectroscopy and 13C‑nuclear magnetic resonance indicated that the substitution of S‑DIP occurred mainly at the C‑6 position, followed by the C‑4 and C‑2 positions. A significant increase was noted in the antioxidant activity of the sulfated derivatives compared with that of DIP. In addition, the S‑DIPs exhibited a more marked reducing capacity and clearing activity of hydroxyl radicals and DPPH. This indicated that the antioxidant capacity of the polysaccharides was significantly higher following sulfation. Furthermore, in in vitro cell investigations, DIP exhibited no inhibitory effects on the growth of the B16 or MCF‑7 tumor cells. However, the sulfated derivatives exerted marked inhibitory effects on these cell lines. Sulfate modification may therefore contribute to an improvement in water solubility and in the antioxidant and antitumor activities of natural DIP.