Increasing global food demand, paralleled by increasing agri-food waste, necessitates efficient valorization strategies to mitigate environmental degradation and promote a sustainable bioeconomy. This chapter comprehensively explores the generation, classification, chemical composition, and functional applications of fruit and vegetable by-products, emphasizing their pivotal role in the circular economy. Agricultural residues such as peels, pomace, seeds, stems, and hulls are identified as rich reservoirs of bioactive compounds including polyphenols, dietary fibers, carotenoids, flavonoids, and essential oils, which exhibit antioxidant, antimicrobial, anti-inflammatory, and anticancer potential. Through advanced postharvest handling and tailored processing techniques, these by-products are integrated into functional food formulations, gluten-free flours, biodegradable packaging films, and restructured meat products, thereby enhancing nutritional value while reducing production costs and waste accumulation. Furthermore, their biotechnological potential is harnessed in the synthesis of green nanoparticles, production of industrial enzymes, heterotrophic algal cultivation, and biofuel generation. Application of these residues in soil amendment and animal feed significantly contributes to improved crop productivity and livestock health, thereby closing the nutrient loop. The chapter underscores the need for scalable and cost-effective bioprocessing technologies, robust postharvest infrastructure, and regulatory frameworks to ensure quality, safety, and consumer acceptance of value-added products derived from agri-food waste. Future research must prioritize optimization of extraction processes, biocompatibility assessment, and techno-functional evaluations for wider industrial adoption. Ultimately, fruit and vegetable by-product utilization represents a strategic pathway to achieve the UN Sustainable Development Goals by advancing resource efficiency, reducing food loss, and promoting environmental stewardship.