The increasing global population will require sustainable means to sustain life and growth. The continuous depletion and increasing wastage of the energy resources will pose a challenge for the survival of the increasing population in the coming years. The bioconversion of waste generated at different stages of the food value chain to ethanol can provide a sustainable solution to the depleting energy resources and a sustainable way to address the growing food waste issue globally. The high carbohydrate and nitrogen content in the food waste can make it an ideal alternative substrate for developing a decentralized bioprocess. Optimizing the process can address the bottleneck issues viz. substrate collection and transport, pretreatment, fermentative organism, and product separation, which is required to make the process economic. The current review focuses on the opportunities and challenges for using the food loss and waste at different stages of the food value chain, its pretreatment, the fermentation process to produce bioethanol, and potential ways to improve the process economics. The impact of substrate, fermentative organisms’ process development, downstream processing, and by-product stream to make the bioethanol production from the waste in the food value chain a commercial success are also discussed.