Natural compounds are considered treasures in biotechnology; however, in the past, the process of discovering bioactive compounds is time consuming, and the purification and validation of the biofunctions and biochemistry of compounds isolated from a medicinal herb are tedious tasks. In this study, we developed an economical process called biotransformation-guided purification (BGP), which we applied to analyze licorice, a traditional Chinese medicine widely used in many therapies. This medicinal herb contains various flavonoids and triterpenoids and, thus, is a suitable material used to assess the ability of BGP to identify and produce bioactive compounds. In the BGP process, the ethyl acetate extract of a commercial licorice medicine was partially purified into three fractions by Sephadex LH-20 chromatography, and Bacillus megaterium tyrosinase (BmTYR) was used to catalyze the biotransformation of the extract from each fraction. One of the products produced via BmTYR-driven biotransformation was purified from the biotransformation-positive extract using preparative C-18 high-performance liquid chromatography, and it was identified as butin (3′-hydroxyliquiritigenin) through nucleic magnetic resonance and mass spectral analyses. Butin was produced from liquiritigenin through BmTYR-catalyzed hydroxylation, with commercial liquiritigenin as the biotransformation precursor. The proposed alternative approach quickly identified and isolated the biotransformed butin from licorice. Moreover, butin demonstrated an antioxidant activity that is stronger by over 100-fold compared with that of its precursor (liquiritigenin). This study showed that the economical BGP process could quickly obtain and validate bioactive molecules from crude extracts of medicinal herbs.