Fast growing food processing industry in most countries across the world, generates huge quantity of by-products, including pomace, hull, husk, pods, peel, shells, seeds, stems, stalks, bran, washings, pulp refuse, press cakes, etc., which have less use and create considerable environmental pollution. With growing interest in health promoting functional foods, the demand of natural bioactives has increased and exploration for new sources is on the way. Many of the food processing industrial by-products are rich sources of dietary, functional, and novel fibers. These by-products can be directly (or after certain modifications for isolation or purification of fiber) used for the manufacture of various foods, i.e. bread, buns, cake, pasta, noodles, biscuit, ice creams, yogurts, cheese, beverages, milk shakes, instant breakfasts, ice tea, juices, sports drinks, wine, powdered drink, fermented milk products, meat products and meat analogues, synthetic meat, etc. A comprehensive literature survey has been carried on this topic to give an overview in the field dietary fiber from food by-products. In this article, the developments in the definition of fiber, fiber classification, potential sources of dietary fibers in food processing by-products, their uses, functional properties, caloric content, energy values and the labelling regulations have been discussed.