Biopolymer-based packaging is emerging as a sustainable replacement for conventional plastic materials. Significant challenges like scalability, machinability, and mechanical properties are preventing biopolymers from industrially advancing despite their sustainable advantages. Also, the usage of materials in packaging is limited due to their toxicity, the degradation products, and their migration properties. Nanocomposite materials and active packaging methods with the antimicrobial agents showed novel advances with enhanced performance. However, these advances frequently increase the complexity and cost of production. For an assessment of their safe and efficient usage, knowledge gaps on the effects of biopolymer migration and degradation on the environment and human health should be addressed. These challenges, which involve enhanced material characteristics, reducing costs, and aligning regulations, demand interdisciplinary methods. This review explores the prospects for sustainable innovation in packaging by examining the challenges and potential solutions associated with the development of biopolymer-based materials. © 2025 Elsevier B.V., All rights reserved.