Onion (Allium cepa L.) is a vegetable widely cultivated and consumed due to its rich content in bioactive compounds. Red onion peel (ROP) powder, which is a by-product derived from the onion industry, has been attracting significant interest as a potential functional ingredient for improving the overall quality of foods. The present study explores the potential of ROP powder as a functional ingredient to improve the quality and nutritional value of whey cheese. Despite being frequently viewed as a food processing waste byproduct, ROP is a rich source of bioactive substances, including antioxidants, flavonoids, and dietary fiber, having antioxidant and antibacterial effects. The ROP extract exhibited high amounts of total polyphenols (119.69 ± 2.71 mg GAE/g dw) and antioxidant activity (82.35 ± 1.05%). Different quantities (1 and 3%) of ROP powder were added to cheese formulations, and the subsequent impact on the texture characteristics, sensory attributes, and phytochemical composition of the value-added cheeses was evaluated. The findings show that the addition of ROP powder improved the texture and the color of the cheeses, providing a visually appealing product. Additionally, adding the ROP powder significantly raised the amount of phytochemicals and antioxidant activity (17.08 ± 0.78 µmol TE/g dw for RCROP1, 24.55 ± 0.67 µmol TE/g dw for RCROP2) in the final product’s formulation. Moreover, adding powder to cheese is an effective way to increase the value of onion by-products and produce polyphenol-enriched cheese.