Onion is one of the main crops in the world, and there has been an increase in the demand for processed onion in the form of frozen and freeze-dried chopped onion in the last decade, with detrimental impact on the environment. Onion byproducts are a rich source of dietary fiber and bioactive compounds, representing a sustainable alternative to the use of traditional ingredients in the formulation of food products for the application of circular economy concept. The aim of this work was to study the potential of onion byproducts as a functional ingredient by determining their in vitro bioactive properties. Onion byproducts, skin (OS) and pulp with 9% of skin (OP), proximal analysis was performed (AOAC, 1999): moisture, ashes, proteins, fat, total dietary fiber (TDF) and total carbohydrates by difference. Bioactive properties were assessed by determining total phenolic compounds (TPC, Folin-Ciocalteu method), antioxidant capacity (ABTS, ORAC-FL and HORAC methods), and α-glucosidase inhibition capacity. Among the most relevant results of proximate analysis, OS showed 64±3% of TDF. OS showed the highest TPC (113±7 mg GAE/g) and antioxidant capacity (699±94 and 1625±92 µmolTE/g for ABTS and ORAC-FL methods, respectively, and 42±2 mg chlorogenic acid/g for HORAC method) (p<0.05), as well as the highest α-glucosidase inhibition capacity (lowest IC₅₀, 447±40 and 625±58 µg/mL for OS and OP, respectively). In conclusion, onion byproducts present potential as a functional ingredient because of the evaluated health-promoting effects, with a subsequent positive environmental impact by applying the circular economy concept.