Recently, terms such as sustainable, bio-based, biodegradable, non-toxic, or environment-benign are being found in the literature, suggesting an increase in green materials for various applications in the future, particularly in the packaging application. The unavoidable shift from conventional polymers to green materials is difficult, as most bio-sourced materials are not water-resistant. Nonetheless, Shellac, a water-resistant resin secreted by a lac insect, used as a varnish coat, has been underutilized for packaging applications. Here, we review Shellac’s potential in the packaging application to replace conventional polymers and biopolymers. We also discuss Shellac’s isolation, starting from the lac insect and its conversion to Sticklac, Seedlac, and Shellac. Further, the chemistry of shellac resin, the chemical structure, and its properties are examined in detail. One disadvantage of Shellac is that it becomes stiff over time. To enable the usage of Shellac for an extended time in the packaging application, a modification of Shellac via physical and chemical means is conferred. Furthermore, the usage of Shellac in other polymer matrices and its effect are reviewed. Lastly, the non-toxic and biodegradable nature of Shellac and its potential in packaging are explored by comparing it with traditional crude-based polymers and conventional bio-based materials.