Biopolymers, derived from renewable resources such as plants, animals, and microorganisms, are emerging as sustainable alternatives to traditional petroleum‐based polymers. The review examines the key characteristics of biopolymers, including their biodegradability, biocompatibility, and potential for carbon neutrality. These characteristics are crucial for determining their suitability for different packaging applications and their potential to reduce environmental pollution. While acknowledging the promise of biopolymers, the review also addresses challenges such as production costs, scalability issues, and performance limitations. Strategies to enhance biopolymer performance, including plasticization, blending, and nanomaterial reinforcement, are discussed. Interestingly, the review highlights the emerging field of active and intelligent packaging systems, which incorporate antimicrobial agents and sensors to extend shelf life and monitor food quality in real‐time. The review emphasizes the importance of life cycle assessments in evaluating the overall environmental impact of biopolymer‐based packaging compared to conventional alternatives. In conclusion, this review provides an overview of the current state of biopolymer research and identifies areas for future investigation. By synthesizing current knowledge, identifying challenges, and highlighting opportunities, this review contributes to ongoing efforts to create a more sustainable and circular packaging industry.