In recent years, the increase in the generation of agro-food processing waste, coupled with uncontrolled disposal and inefficient recovery methods, has raised concerns among society, industries, and the research community. This issue is compounded by the accumulation of conventional synthetic packaging. Owing to their significant environmental and economic impacts, the development of sustainable, biocompatible, and biodegradable materials has become an urgent target. In this context, research efforts have been directed toward developing new packaging materials based on renewable sources, such as agro-food waste, contributing to the circular economy concept. However, despite significant advances, novel agro-food-waste-based packaging solutions still largely remain at a laboratory scale. This situation highlights the urgent need for further understanding and thorough investigation into how to upscale these products, thereby promoting engagement, investment, and awareness across various fields. This review aims to discuss the current advances in food packaging development using agro-food waste. It covers the main agro-food wastes and by-products currently recovered for sustainable packaging systems through various approaches, such as the extraction of valuable compounds or waste treatments for incorporation into packaging materials, techniques for their valorization, and recent applications of agro-food waste materials in films and coatings. It also addresses the toxicological and safety approaches, challenges, and future perspectives. After an extensive review, we conclude that current research faces challenges in transitioning novel findings to commercial scale, primarily due to safety factors, high production costs, performance deficits, legislative ambiguities, lack of consumer awareness, and inadequate governmental regulations. Consequently, significant investments in research and development appear to be mandatory in the coming years, aiming for optimized, safe, and cost-effective solutions.