<p>Traditional food packaging materials, such as plastics and synthetic polymers, negatively impact the environment. On the other hand, natural fibers (NFs) obtained from renewable resources can be used as alternative packaging materials to mitigate pollution and waste management issues. This review provides a critical analysis of natural fiber composites (NFCs) as a sustainable alternative, moving beyond a descriptive listing of studies to a synthesized evaluation. The review focuses distinctly on materials, performance enhancement techniques, analytical properties, and functional applications of NFCs. The study provides a comparative analysis of NFs, systematically categorizing surface modification techniques, and integrating performance data to draw meaningful conclusions. Key technical limitations, such as poor fiber-matrix compatibility and moisture sensitivity, have been discussed in the context of specific material systems and modification strategies. Furthermore, this review identifies and elaborates on specific future research directions, including the role of machine learning in material optimization, the challenges of regulatory compliance for food-contact materials, and the hurdles of industrial scalability. This work offers a structured, analytical overview intended to guide future research and development in green food packaging materials.</p>