Augmenting value-added products generation with the biorefinery process of sugar cane by utilizing the by-products helps to achieve a more sustainable model of the sugarcane industry and in turn, contributes to the circular economy. Among the value-added products produced from sugarcane waste, functional foods offer additional health benefits besides their nutritional and calorific value. In recent years non-digestible sugars gained interest as potential prebiotic functional foods which benefit the host without increasing calorific value. These sugars are produced by the breakdown of carbohydrate polymers like cellulose and xylan, by thermochemical treatment or by enzymatic hydrolysis, or a combination of both. Sugar cane bagasse (SB) is an economical source of xylan which can serve as the substrate for xylooligosaccharides (XOS), xylobiose, xylitol, and ethanol. Cellulases, xylanases, and ligninases have wide applications in food processing, agro-fiber, pharmaceutical, and the paper and pulp industries including nutraceuticals production, where these enzymes provide eco-friendly alternatives to some chemical processes and help to reduce environmental impact. Conventional thermochemical methods for nutraceuticals production require chemicals that result in the release of toxic byproducts thus requiring additional steps for refining. In this context, the sustainable and eco-friendly processes for the production of nutraceuticals require employing biocatalysts like microbial enzymes or microbes as a whole, where in addition to averting the toxic byproducts the refining process requires lesser steps. The present chapter discusses the current research and challenges in the production of value-added products from sugarcane byproducts and their contribution to the sustainability of the sugarcane industry.