Bioactive compounds possess different health benefits. Onion contains various bioactive compounds, such as organosulfur compounds, flavonols, ascorbic acids, and carbohydrate prebiotics, and its by‐products have more content of flavonoids than the bulb. Diallyl monosulfide, diallyl disulfide, diallyl trisulfide, and diallyl tetrasulfide are the major organosulfur compounds, whereas quercetin, kaempferol, anthocyanin, and luteolin are considered as main flavonoids. Ascorbic acid and fructooligosaccharides are also regarded as bioactive compounds. Onion bioactive compounds have the strong antioxidant potential for neutralizing oxidative stress of the cells. These bioactive components are beneficial as anticarcinogenic, antibiotic, anti‐inflammatory, antiplatelet, antidiabetic, and cardioprotective agents along with other nutritional benefits. However, various postharvest practices have an impact on these bioactive compounds, for example, curing mostly enhances the bioactive level and processing temperature generally decreases the concentration of many of them, whereas storage studies suggest an increase of others under optimized conditions. Additionally, conventional extraction techniques showed a negative impact on bioactive compounds of onion, whereas innovative methods yielded a higher amount of bioactive components. There is a need for innovative and integrated procedures in the postharvest sector to maintain or enhance the level of bioactive compounds without compromising the quality of onions. The present review comprehensively describes different bioactive compounds of onion, their chemistry, and their pharmacotherapeutic roles. Moreover, it also explores the effects of various postharvest factors, such as temperature, storage duration, and extraction conditions on the level of the bioactive components. It also suggests industrial applications of onion waste and its bioactive compounds in the food sector.