Food packaging plays a vital role in mitigating nutrients losses by extending shelf life and maintaining product quality. However, the non-biodegradable nature of the conventional plastic packaging poses significant environmental challenges. Consequently, the global shift towards sustainable packaging solutions has led to innovative approaches in the utilization of biodegradable coatings derived from natural sources that offer promising properties for food packaging applications. Moreover, extraction and incorporating essential oils (EOs) from global waste including food waste present an opportunity for resource utilization into various coating materials that enhances their functional properties, improving food preservation. This review article explores the plausible potential of EOs to be used as biodegradable coatings from waste to extend shelf life and further enhance food storage quality by mitigating the microbial spoilage, prevent moisture loss, and act as gas barriers. Additionally, they stabilize various food parameters such as pH, color, acidity, and firmness, reducing weight loss. Various packaging systems has been designed to utilize waste-derived EOs for preserving both plant and animal-based foods. Biodegradable packaging from natural polymers and incorporating EOs extracted from food waste represents a revolutionized sustainable approach for waste management and food preservation. We have examine recent literature on EOs extracted from waste food items along with upcoming challenges like volatility and degradation, affecting shelf life and compatibility. Future research should focus on cost-effective extraction, advanced encapsulation, safety standardization, and eco-friendly materials to enhance the sustainability of EO-based packaging.