Lemon peel (LP) was integrated into polyvinyl alcohol/chitosan (PVA/CS) to produce innovative active food packaging films via solvent‐casting method. PVA/CS/LP biocomposites were prepared with varying LP contents (1%, 3%, and 5% by weight) to investigate their impact on morphological, thermal, structural, biodegradability, solubility, mechanical, and bioactivity properties of the PVA/CS blend. Scanning electron microscope analysis revealed a uniform dispersion of LP within the matrix. Attenuated total reflectance ‐ fourier transform Infrared spectroscopy (ATR‐FTIR) study confirmed interaction between lemon peel and the matrix. The incorporation of LP enhanced thermal stability and enzymatic activity of PVA/CS films while reducing their UV–vis light transparency. Additionally, the biodegradability of the biocomposites increased, reaching 74% after 30 days of soil burial. Moisture content, water solubility, and swelling decreased with LP content, favoring food preservation. It can be asserted from the tensile test that blending PVA with CS enhances the Young's modulus by 17%. The incorporation of LP into the PVA/CS blend further enhanced the Young's modulus and tensile strength to 1322 and 193 MPa, respectively, attributed to the strong hydrogen bonding between the PVA/CS matrix and LP. Moreover, PVA/CS/LP biocomposites effectively reduced weight loss in cherry tomatoes and inhibited microbial growth, suggesting their potential as eco‐friendly bioactive packaging materials for food preservation.