A sustainable multifunctional food packaging composite film containing waste garlic peel extract (GPE) and Chitosan (CH) was prepared. This film exhibited antimicrobial potential towards Staphylococcus aureus and Klebsiella pneumoniae. GPE/CH films' morphological, physical, and functional properties were compared to those of CH film. Fourier transform infrared showed the interactions through hydrogen bonding between CH and GPE in the blends that improved the polymers' compatibility. Furthermore, X-ray diffraction analysis validated the compatibility between GPE and CH. GPE/CH films exhibited higher thickness and moisture content than the CH film. Remarkably, GPE/CH films showed lower water vapor barrier properties and higher ultra-violet protection and mechanical strength than CH film. Compact surfaces of the GPE infused CH films were unveiled through Scanning electron microscopy. GPE/CH film showed improved thermal stability after the addition of GPE. MTT method's cytotoxicity study manifested that the GPE/CH films are antioxidant and non-cytotoxic, implicating their biocompatibility and non-toxicity. The results suggest that GPE/CH films can find widespread commercial applications like food packaging materials, replacing the commonly used petrochemical plastics.