Plastics are non-biodegradable and take a long time to decompose, their extensive use, especially in food packaging, has raised major environmental and health issues. Cellulose and its derivatives are numerous, biodegradable, renewable, and exhibit higher mechanical and barrier properties, they have become known as potential alternatives. This paper highlights cellulose's structure, origins, and physicochemical properties, focusing particular consideration to the material's potential for application in eco-friendly packaging. Cellulose, one of the most versatile natural polymers, is mostly made from plant-based biomass, which includes industrial leftovers, microbial fermentation, and agricultural waste. Its use in active food packaging has been further increased by modern processing methods and functional changes such the addition of antioxidants and antimicrobials. Due to its high tensile strength, crystallinity, and reactive surface area, nano-cellulose provides improved reinforcement in coatings and films, extending the shelf life and preserving food. Recent advances in cellulose functionalization and solvent systems show that cellulose has a great deal of promise to replace traditional plastics, considering issues with cost, moisture sensitivity, and large-scale production. In overall, cellulose-based coatings and films enable waste reduction and promote a circular bioeconomy, making them an essential step toward sustainable packaging solutions.