Fabricating active and intelligent packaging materials has become the highest demand for catering to market needs, especially after the COVID-19 pandemic, for ensuring food safety. Thus, the wider objective of this article was to promote active and smart packaging biofilms possessing antibacterial and humidity-sensing properties for sustainable poly(vinyl alcohol) (PVA)/gelatin (Ge) reinforced with biosynthesized magnesium nanoparticles (MgO NPs) by a solvent-casting route. The UV−visible spectrum has been utilized to determine the optimized biosynthesized MgO NPs and then the nanostructure of optimized MgO NPs investigated by varying techniques such as XRD, SEM−EDX, TEM, FT-IR, and thermogravimetric analysis. Four MgO NPs proportions (i.e., 1, 3, 5, and 10 wt %) were used to fabricate PVA/Ge biofilms. In the biofilms system, the tensile results showcased that the nanocomposite film containing 5 wt % of MgO NPs had the highest tensile strength value (i.e., 22.10 MPs) compared to the other biofilms or the unfilled blank (i.e., 6.30 MPs). Correspondingly, the humidity-sensing data revealed that the PVA/Ge-1% MgO NPs sensor had higher sensitivity over a broad range of relative humidity from (7−97% RH) and at 100 Hz. Additionally, the hydrophobicity of biofilms, measured by water contact angle, UV-stability, and antioxidant and antibacterial properties was also analyzed to possibly use these biofilms in active food packaging with extended shelf life of foodstuffs. However, the PVA/Ge-1% MgO NPs biofilm was predominately found to possess attractive sensing properties and could be considered as a sensor for intelligent food packaging.