<p>Sustainable food packaging materials derived from renewable sources are in increasing demand in the food industry. This has generated remarkable interest in incorporating bioactive compounds to fabricate antimicrobial, disease-resistant, and eco-friendly food packaging films. This review highlights a wide range of biodegradable polymeric materials, including agro- based (soy protein, zein, and cellulose), animal based (gelatin and chitosan), synthetic (polylactic acid [PLA], polyethylene adipate [PEA], and polycaprolactone [PCL]), and a few others derived from microbial sources (polyhydroxyalkanoates [PHA] and polyhydroxybutyrates [PHBs]), that can be used to develop biodegradable films. The focus is on strategies for incorporating aromatic compounds (e.g., essential oils and phenolics) into these polymeric matrices to enhance antimicrobial activity and extend food shelf life. This review summarizes the usage of different bio-based polymers, mostly derived from renewable resources, in the development of film materials by addition of aromatic functionalized compounds. Additionally, the antioxidant and antimicrobial mechanism of functionalized compounds are described in detail. Through a comprehensive analysis of current research and emerging technologies, this review provides insights into the potential of aromatic compound-based biopolymer systems to develop sustainable active food packaging materials that achieve desired functional performance while minimizing environmental effects. Though the wide spread usage of bio-based packaging materials are desired but several issues with respect to material performance such as high hydrophilicity, migration of chemicals from packaging system and less shelf-life are the key challenges. Also from future prospect point of view, the acceptance of bio-based packaging material by consumer and Government’s directive to increase usage of bio-based materials will boost its application.</p>