The extensive use of petroleum-based synthetic and non-biodegradable materials for packaging applications has caused severe environmental damage. The rising demand for sustainable packaging materials has encouraged scientists to explore abundant unconventional materials. For instance, cellulose, extracted from lignocellulosic biomass, has gained attention owing to its ecological and biodegradable nature. This article reviews the extraction of cellulose nanoparticles from conventional and non-conventional lignocellulosic biomass, and the preparation of cellulosic nanocomposites for food packaging. Cellulosic nanocomposites exhibit exceptional mechanical, biodegradation, optical and barrier properties, which are attributed to the nanoscale structure and the high specific surface area, of 533 m2 g−1, of cellulose. The mechanical properties of composites improve with the content of cellulose nanoparticles, yet an excessive amount induces agglomeration and, in turn, poor mechanical properties. Addition of cellulose nanoparticles increases tensile properties by about 42%. Barrier properties of the composites are reinforced by cellulose nanoparticles; for instance, the water vapor permeability decreased by 28% in the presence of 5 wt% cellulose nanoparticles. Moreover, 1 wt% addition of filler decreased the oxygen transmission rate by 21%. We also discuss the eco-design process, designing principles and challenges.