The agrifood industry produce massive waste production from fruits worldwide. The fruit waste such as peels, hull, seeds, and pomace is a reservoir of several phytoconstituents, which can be used for the development of various nutraceuticals and functional food. It contains a wide range of bioactive compounds such as phenolics, flavonoids, dietary fibers, organic acids, and carotenoids. These constituents not only exhibit health-promoting antioxidant and antimicrobial properties but also serve as nutrient-rich substrates for microbial fermentation. Their high carbohydrate and lignocellulosic content make them especially suitable for the production of value-added products. Various extraction methods such as supercritical fluid extraction, enzyme-assisted extraction, subcritical water extraction, ultrasound-assisted extraction, and microwave-assisted extraction are used for the isolation of active components from fruit waste. Apart from this, enzymatic bioprocessing and genetic engineering give sustainable methods for the development of nutraceuticals from agro-wastes. The regulatory hurdles and the lack of validated safety and efficacy data for bioactives derived from fruit waste slow their acceptance in food, nutraceutical, cosmetic, and pharmaceutical applications. The amalgamation of fruit waste into functional foods improves their nutritional index, free radical scavenging activity, and shelf life, which ultimately upgrade the food quality and security. Therefore, the use of fruit waste assists in achieving the goal of circular bioeconomy, alleviates environmental effect, and offers a worthy way toward sustainable health and nutrition solutions.