This study focuses on combining different bioprocessing tools in order to develop an in-depth engineering approach for enhancing the biological properties of two valuable food by-products, namely fish waste and yellow onion skins, in a single new bioactive formulation. Bone tissue from phytophagous carp (Hypophthalmichthys molitrix) was used to obtain bioactive peptides through papain-assisted hydrolysis. The peptides with molecular weight lower than 3 kDa were characterized through MALDI-ToF/ToF mass spectrometry and bioinformatics tools. As a prerequisite for microencapsulation, the ability of these peptides to bind the flavonoids extracted from yellow onion skins was further tested through fluorescence quenching measurements. The results obtained demonstrate a considerable binding potency with a binding value of 106 and also the presence of one single or one class of binding site during the interaction process of flavonoids with peptides, in which the main forces involved are hydrogen bonds and van der Waals interactions. In the freeze-drying microencapsulation process, an efficiency for total flavonoids of 88.68 ± 2.37% was obtained, considering the total flavonoids and total polyphenols from the powder of 75.72 ± 2.58 quercetin equivalents/g dry weight (DW) and 97.32 ± 2.80 gallic acid equivalents/g DW, respectively. The 3-(4,5-dimethylthiazol-2-yl)-2,5-diphenyltetrazolium bromide (MTT) test on the L929 cell line cultivated in the presence of different concentrations of microencapsulated samples (0.05–1.5 mg/mL) proved no sign of cytotoxicity, the cell viability being over 80% for all the samples.