Papaya fruit is commonly known for its nutritional and medicinal value. It is a perennial, herbaceous, and trioecious cross-pollinated species with male, female, and hermaphrodite plants. The Chilean papaya, originating from South America, has been extensively spread throughout the Andean nations, cultivated primarily in the Coquimbo and Valparaíso valleys in Chile, between 34°41′ and 36°33′ latitude south. Its intense aroma, yellow color, and oblong shape characterize this fruit. It also stands out for its high content of carotenoids, vitamins, proteins, and polysaccharides, which make it a great functional food. Also, papaya contains bioactive compounds with antifungal, anti-inflammatory, and wound-healing effects. For years, the fruit has been used to produce canned fruit, juice, and candies to satisfy the local market. Chilean papaya has significant economic importance, supplying both local and international markets. This review aims to consolidate the evidence-based information on the native Chilean papaya (Vasconcellea pubescens) as a food matrix. The fruit’s ripening process, nutritional composition, industrial applications, and health-promoting properties, including its antioxidant and antidiabetic effects, are thoroughly examined. Additionally, the extraction of papaya oil, encapsulation of bioactive compounds, industrial and artisanal processing techniques, and patents are explored, highlighting the diverse applications and potential benefits of this fruit.