The bioassay-guided fractionation of Daphne retusa Hemsl. has led to the isolation of a new aryl tetrahydronaphthalene lignan derivative named as daphnretusic acid (1), along with six new source compounds such as 5,7-dihydroxyflavone (2), 7-hydroxyflavone (3), 6-methoxyflavone (4), (+) pinoresinol (5), (+) sesamin (6), and β-sitosterol-3-O-β-D-glucopyranoside (7). Their structures were elucidated by (1)H NMR, (13)C NMR, 1D, 2D NMR, UV, IR, and EIMS analyses. All the fractions (n-hexane, CHCl3, AcOEt, CH3OH, and water) and pure compounds (1-7) were subjected to the assay of urease and α-chymotrypsin inhibitory activities. Chloroform and methanol soluble fractions showed moderate urease inhibition. Compound 2 exhibited significant urease inhibition with IC50 value 60.4 ± 0.72 μM, whereas compounds 1 and 3-7 remained inactive during urease inhibition and α-chymotrypsin bioassays.