Galenic preparations of German chamomile are used to treat mild skin diseases, inflammation, and spasms, and they have also been reported to have anxiolytic and sedative effects. The medicinal use of chamomile is well known in ethnomedicine. After obtaining its galenic preparations, there is lots of waste left, so it is expedient to develop waste-free technologies. The aims of this study were to gain knowledge of the ethnomedical status of chamomile in the past and present, develop methods for preparing essential oils and dry extracts from German chamomile flowers using complex processing, reveal the phytochemical composition of such extracts, and verify the analgesic and soporific activity of the extracts. Two methods for the complex processing of German chamomile flowers were developed, which allowed us to obtain the essential oil and dry extracts of the tincture and aqueous extracts as byproducts. A total of 22 phenolic compounds (7 hydroxycinnamic acids, 13 flavonoids, and 2 phenolic acids) were found in the dry extracts by using UPLC-MS/MS. In total, nine main terpenoids were identified in the chamomile oil, which is of the bisabolol chemotype. During the production of chamomile tincture, a raw material-extractant ratio of 1:14-1:16 and triple extraction are recommended for its highest yield. In in vivo studies with mice and rats, the extracts showed analgesic activity and improvements in sleep. The highest sedative and analgesic effects in rodents were found with the dry extract prepared by using a 70% aqueous ethanol solution for extraction at a dose of 50 mg/kg. The developed methods for the complex processing of German chamomile flowers are advisable for implementation into the pharmaceutical industry to reduce the volume of waste during the production of its essential oil and tincture, and to obtain new products.