Banana peel powder is considered one of the most nutritive and effective waste product to be utilized as a functional additive in the food industry. This study aimed to determine the impact of banana peel powder at concentrations of 2%, 4%, and 6% on the nutritional composition, physicochemical parameters, antioxidant potential, cooking properties, microbial count, and organoleptic properties of functional nuggets during storage at refrigeration temperature for 21 days. Results showed a significant increase in nutritional content including ash and crude fiber ranging from 2.52 ± 0.017% to 6.45 ± 0.01% and 0.51 ± 0.01% to 2.13 ± 0.01%, respectively, whereas a significant decrease was observed in crude protein and crude fat ranging from 13.71 ± 0.02% to 8.92 ± 0.02% and 9.25 ± 0.02% to 4.51 ± 0.01%, respectively. The incorporation of banana peel powder significantly improved the Water Holding Capacity from 5.17% to 8.37%, cooking yield from 83.20 ± 0.20% to 87.73 ± 0.16% and cooking loss from 20.19 ± 0.290% to 13.98 ± 0.15%. Antioxidant potential was significantly improved as TPC of functional nuggets increased ranging from 3.73 ± 0.02 mg GAE/g to 8.53 ± 0.02 mg GAE/g while a decrease in TBARS (0.18 ± 0.02 mg malonaldehyde/kg to 0.14 ± 0.02 mg malonaldehyde/kg) was observed. Furthermore, functional broiler nuggets depicted a significantly reduced total plate count (3.06–4.20 × 105 CFU/g) than control, which is likely due to high amounts of phenolic compounds in BPP. Broiler nuggets supplemented with 2% BPP (T1) received the greatest sensory scores in terms of flavour, tenderness, and juiciness. Results of current study revealed the potential of BPP to be utilized as an effective natural source of fibre supplementation in food products along with enhanced antioxidant and anti-microbial properties.