Phenolic extract from banana peel was extracted with 95% ethanol and characterized by LC-TOF-MS/MS. Epicatechin, rutin, 3,4-dihydroxybenzaldehyde, 3,4-dihydroxybenzoic acid, myricetin, ferulic acid, chlorogenic acid, and gallic acid were detected in the extract. Cholate test was performed for the initial examination of the hypolipidemic effect of the dietary fibres. The dietary fibres prepared by sequential treatment with sulphuric acid then sodium hydroxide (SST) and sodium hydroxide treatment (SHT) had high water-holding capacities (7.48 and 6.91 g g−1) and swelling capacities (4.8 and 4.3 ml g−1). The dietary fibres prepared by sequential treatment with trypsin then sulphuric acid (TST) and sulphuric acid treatment (SAT) had high oil-holding capacities (5.52 and 5.10 g g−1) and enhanced capacities for sodium cholate adsorption. Results indicated the potentials of banana peel as functional ingredient in food applications.