Agarase is a promising biocatalyst that catalyze the hydrolysis of agar or agarose and produce oligosaccharides with several biotechnological applications. Agarase production by Dendryphiella arenaria was optimized using a natural low-cost medium composed of the red alga Palisada perforata and natural seawater. The results showed that seaweed biomass and seawater concentrations were the most important factors influencing agarase production. After optimization, the agarase activity was enhanced to 2.5 ± 0.3 U/mL. The crude agarase exhibited a wide pH (4‒10) stability with residual activity more than 75%. The enzyme showed high thermostability at 40 °C, and a moderate thermostability at 50, 60, 70 °C. Several parameters of thermal inactivation kinetics and thermodynamics were calculated, and suggested that the enzyme would be thermostable. Enzymatic saccharification of alkali extracted polysaccharides from the red macroalgal biomass was also optimized with respect to substrate concentration, enzyme dosage, and temperature and proceeded optimally at 0.15% substrate, 40 °C with enzyme dosage 0.9 mL/mL substrate. Under these conditions, the enzymatic saccharification yielded 647.96 mg reducing sugars/g substrate. This study therefore describes an improved, effective, and low-cost process for agarase and fermentable sugar production from seaweed biomass.