A significant issue is reducing the amount of biological waste that is disposed of in landfills, particularly in high-density residential areas. The Wastes Framework Directive (98/2008), in particular, sets forward the legal requirements for source separation in the European Union’s (EU) environmental legislation. The directive sets a target for separate collection of 10% of the organic waste produced in each municipality by 2030, especially with regard to organic waste. The pilot experience of an integrated biowaste management system that supports source separation and urban composting in an Autonomous Composting Unit (ACU) was presented in this study. The Municipality of Rhodes installed five ACUs in various locations. Used food and green waste are the two types of waste that are deposited in the ACUs. The development of a system for the collection of produced biowaste and its treatment at the source, without producing a nuisance, within an urban area, is the goal of this innovation. Since landfilling of mixed municipal solid waste has long been a common practice on the island of Rhodes, as well as in many other locations of insular and mainland Greece, this technique was introduced as a novel implementation and innovation for the region. The results showed that biowaste source separation was successfully carried out by citizens, resulting in high-purity feed. All ACUs produce compost that is of a standard quality. In accordance with the principles of the circular economy, this study showed that ACUs are a sustainable solution for taking a closed unit approach to the biowaste management problem in urban areas.