Food waste exacerbates greenhouse gas emissions and environmental degradation, while the prevalent use of conventional plastics in food packaging, characterized by their cost-efficiency, lightweight nature, and durability, has intensified environmental concerns through increased greenhouse gas emissions and waste accumulation. In response, the utilization of biowaste-derived biopolymers for bioplastic production has emerged as a promising strategy within the framework of the circular economy. Although these bioplastics offer advantages such as biodegradability and bio-based origins, early formulations were constrained by suboptimal mechanical strength, hydrophilicity, and barrier properties, necessitating the incorporation of advanced additives. Recent advancements have centred on improving the functionality of bioplastics derived from biowaste through the integration of specialized additives. These enhancements, including the incorporation of functional fillers and reinforcement agents, have significantly augmented the tensile strength, Young’s modulus, thermal stability, and water vapor barrier performance of bioplastics. Additionally, these additives impart notable antimicrobial and antioxidant properties, which enhance food safety and extend shelf life while maintaining eco-friendly characteristics. This review comprehensively examines the latest innovations in biowaste-to-bioplastics technologies, focusing on the integration of antimicrobial, antioxidant, and physiochemical enhancements. By highlighting these advancements, the review emphasizes the transformative potential of biowaste-derived bioplastics in developing sustainable food packaging solutions and advancing a circular economy.