The worldwide candidacy of plant species for treatment of various diseases and infections still stood firm today. In developing countries, such as Ethiopia, where health care coverage is less, traditional medicine has played a significant role in treating health problems in both livestock and humans. Aloe otallensis is one of the plant species widely used in traditional medicine in Southern parts of Ethiopia, for treatments of human illnesses with the help of traditional practitioners. Medicinal products used by the society are neither controlled nor properly regulated by quality assurance parameters and may cause serious problem when not properly utilized. This study was conducted aiming to isolate and characterize bioactive compounds from aloe otallensis root extracts for medicinal purposes. Extraction was carried out from root part of the plant with solvents of different polarities. IR and NMR spectroscopic techniques were used to get spectrum of the extracts. The phytochemical analysis from crude extracts confirmed the presence of alkaloids, saponins, flavonoids, phenols, steroids, glycosides, terpenoids and tannins. Two different pure compounds are isolated and the compounds are characterized using spectra of spectroscopic techniques (IR, 1H-NMR, 13C-NMR and DEPT-135). Results signify that the two isolated and characterized compounds are 8-acetoxy -8, 9 ,9a ,10-tetrahydrobenzo[g]isoquinoline-2(3H)-carboxylic acid and 7-acetoxy – 7, 8, 9 – dihydrobenzo[g] oxy-nitro isoquinoline -2(5aH) - carboxylic acid . These compounds are alkaloids and can be used for antimalarial and anti-pain treatment and this result supports the knowledge of the community of using the plant parts for antimalarial and anti-bacterial treatments.