The growing demand for eco-friendly packaging solutions has intensified due to increasing environmental concerns and stringent regulatory measures. Biodegradable polymers have emerged as a promising alternative to traditional plastics, offering a sustainable solution that decomposes into benign byproducts and reduces ecological harm. Recent advancements in biodegradable polymers for packaging applications have demonstrated significant potential, particularly with biopolymers such as polylactic acid (PLA), polyhydroxyalkanoates (PHAs), and starch-based composites. These biopolymers have been investigated for their potential to enhance performance and sustainability through advanced strategies, including nanomaterial reinforcement, multilayer composite structures, and biodegradable polymer blending. This study reveals that biodegradable polymers can significantly reduce environmental impact, with life cycle assessments indicating potential reductions in carbon footprint and plastic waste. The adoption of biodegradable polymers can minimize the environmental footprint associated with traditional plastics, contributing to a more sustainable packaging industry. Furthermore, the potential for recycling these polymers in a circular economy context is substantial, with mechanical and chemical recycling techniques like enzymatic biocatalysis offering opportunities to optimize end-of-life scenarios. By harnessing the power of biodegradable and recyclable polymer systems, the packaging industry can reduce its environmental footprint, minimize waste, and promote a circular economy. This approach aligns with global sustainability goals, supporting a more sustainable future for the packaging industry. The development and implementation of biodegradable polymers can pave the way for significant strides towards sustainable development, enabling the industry to reduce its reliance on fossil-based plastics and mitigate its environmental impact. With continued innovation and investment, biodegradable polymers can play a vital role in shaping a more sustainable packaging industry.