In recent times, there is a growing demand for low-cost raw materials, renewable resources, and eco-friendly end products. Natural fibers are considered as strong candidates to be used as a potential reinforcement for composite manufacturing. In the current study, natural fibers extracted from banana peel were coated with bacterial cellulose through a green biosynthesis approach as well as by a simple slurry dipping method. Thus, natural fibers from banana peel waste were used the first time, to produce bacterial cellulose-natural fiber composites. SEM analysis revealed good interaction between the hybrid fibers and the epoxy matrix. Thermal gravimetric analysis results revealed that the degradation temperature increases because of the addition of bacterial cellulose on fiber surface, which improves the thermal stability. The maximum thermal decomposition temperature (405°C) was noticed for nanocomposites reinforced by banana fibers with bacterial cellulose deposited on their surface. Whereas the lowest weight loss was also found for the same sample group. The highest tensile strength (57.95 MPa) was found for SBC-BP/epoxy, followed by DBC-BP/epoxy (54.73 MPa) and NBP/epoxy (45.32 MPa) composites, respectively. Composites reinforced by both types of hybrid banana fibers shown comparatively higher tensile performance as compared with the neat banana peel fiber-epoxy composites, which can be attributed to the high strength and stiffness associated with the bacterial cellulose. Overall, this study suggests a successful and green route for the fabrication of natural fiber-reinforced composites with improved properties such as tensile strength and thermal stability.