In the present study, polycaprolactone (PCL) composite films incorporated with various concentrations of grapefruit seed extract (GSE) as an antimicrobial agent were prepared using a twin-screw extruder. Physical characteristics as well as antimicrobial properties of the PCL/GSE composite films were analyzed. The results showed that the surface color of the films gradually changed with increasing GSE concentration. Fourier transform infrared spectra indicated no significant structural changes such as chemical bond formation between PCL and GSE. Thermal properties were slightly affected due to GSE incorporation. Crystallinity of the composite films decreased as the amount of GSE increased. In vitro analysis indicated that the antimicrobial activity of the PCL/GSE composite films increased as the GSE concentration increased, with a 5% concentration showing the strongest inhibitory activity against Listeria monocytogenes, with 5.8-log reduction in bacterial count. Application testing of the films was carried out for cheese packaging, and biodegradation of the samples was assessed via soil burial testing. Our findings confirmed the potential use of PCL/GSE composite films as biodegradable food packaging material with antimicrobial activity.