The development of biodegradable food packaging with superior properties and functionalities compared to conventional food packaging is one of the emerging research interests. Immediate disposal of conventional single use nonbiodegradable food packaging results in adverse environmental impact. Utilization of either biomass‐based, microorganism‐derived, or biotechnologically synthesized biopolymers as biodegradable matrices is the common approach toward achieving sustainability. Consequently, starch and cellulose are being commonly used as biodegradable matrices. However, rather than being fully biodegradable, most of them can be considered as semibiodegradable. Majority of the review studies are based on matrices that have an origin in edible sources, which might result in food insecurity. Although development of bio‐based polymers with sound packaging properties have been extensively studied, the potential agro‐industrial waste as alternative, eco‐friendly, and economically viable matrices have attracted little attention. Therefore, the approaches of developing biodegradable food packaging and the framework of converting agro‐industrial waste into biodegradable packaging matrices are discussed comparatively in this paper. It also critiques the approaches and valorization of agro‐industrial waste in biodegradable food packaging. Thereby, an overview of physicochemical, functional, and biodegradable properties of commonly used biodegradable food packaging materials are provided as an insight for agro‐industrial waste‐based food packaging. The potential use of agro‐industrial waste‐based biodegradable food packaging materials against commonly used biodegradable food packaging materials has been highlighted in this study. Thereby, the vital necessity of growing awareness about agro‐industrial waste as biodegradable food packaging materials is emphasized through this comprehensive review.