<p>The recovery yield, functional properties, and biological activities of bioactive compounds from food waste can be enhanced by biochemical conversion. In this study, solid-state fermentation was used as a pretreatment before ultrasound-assisted extraction, and critical parameters for the combined process were identified by response surface methodology to achieve the highest recovery of polyphenols from passion fruit peel. After processing under optimal conditions, the passion fruit peel extract had a 414% enhancement in total phenolic content with the appearance of gentiopicrin and quercitrin along with 140–265% increase in epicatechin, gallic acid, 4-hydroxybenzoic acid, kaempferol, quercetin, sinapic acid, and syringic acid determined by UHPLC-MS/MS. Fermented peel extract also showed an improvement in thermal and storage stability, bioaccessibility, and antioxidant activity. Another enhanced value of the fermented peel extract was the antibacterial selectivity in terms of anti-growth, anti-survival, and anti-biofilm, which was associated with the selective effects on cell membrane permeability and demonstrated by the opposite effects on three pathogenic versus three beneficial bacteria. It was further revealed that an increase in phenolic compounds and a reduction in pH value after fermentation contributed to the improved stability and antibacterial selectivity of fermented passion fruit peel extract. Overall, the study pointed to the efficacy of solid-state fermentation as a pre-extraction treatment to generate high-quality products from passion fruit waste with a prospective contribution to new product development and sustainable food waste management.</p> Graphical Abstract <p></p>