In this study, Lactobacillus strains with beneficial biofunctions were screened and applied to ferment coconut water. The effects of Lactobacillus fermentation on the phenolic and flavor components of coconut water were investigated. The results showed that the strains Lactobacillus casei U2.1 and Lactobacillus paracasei M1.5 possessed excellent DPPH radical scavenging (30.91%) and &alpha;-amylase inhibitory activity (57.44%), and both of them survived over 50% in simulated gastrointestinal fluids. The co-fermentation of the two strains elevated the total phenolic content of coconut water by 19%, with a significant increase in free phenols and insoluble glycoside-type phenols (P < 0.05), indicating that lactobacilli fermentation promoted the release and conversion of phenolics. Through gas chromatography-mass spectrometry (GC-MS) analysis, it was found that the variety of volatile flavor substances increased by 27 species after fermentation, and the generation of key flavor substances (phenylethanol and ethyl caprylate) enhanced the aroma quality of the coconut water. In addition, the accumulation of potential physiologically active components (palmitoleic acid and cis-5-dodecenoic acid) further enhanced the nutritional value of the product. In conclusion, the co-fermentation of the two strains improved the nutritional value and flavor of coconut water, which provided a theoretical basis for the development of fermented coconut water beverage.