Carotenoid extracts from shrimp processing discards were evaluated for antioxidant activity. Crude extract and fractions rich in astaxanthin showed strong antioxidant activity as indicated by radical scavenging, reducing activity and metal chelating activity, comparable to that of the known antioxidants α-tocopherol and TBHQ. Singlet oxygen quenching activity of crude extract and its fractions was higher than that of α-tocopherol. Nitric oxide scavenging activity was also higher than α-tocopherol. The ability of the astaxanthin-rich fraction to inhibit the thermal oxidation of phospholipid liposomes, with a protection factor of 22.6 ± 1.7 units, was better than that of α-tocopherol (8.5 ± 1.5 units). The higher antioxidant activity of the astaxanthin-rich fraction was also indicated by a higher protection factor (14.1 ± 3.2 units) compared to α-tocopherol (6.2 ± 0.1 units) against singlet oxygen mediated oxidation of liposomes. The results indicate the potential of shrimp carotenoid extract as a natural antioxidant for possible use in food and biomedical applications.