Carbon dots (CDs) are a recent addition to the nanocarbon family, encompassing both crystalline and amorphous phases. They have sparked significant research interest due to their unique electrical and optical properties, remarkable biocompatibility, outstanding mechanical characteristics, customizable surface chemistry, and negligible cytotoxicity. Their current applications are mainly limited to flexible photonic and biomedical devices, but they have also garnered attention for their potential use in intelligent packaging. The conversion of food waste into CDs further contributes to the concept of the circular economy. It provides a comprehensive overview of emerging green technologies, energy-saving reactions, and cost-effective starting materials involved in the synthesis of CDs. It also highlights the unique properties of biomass-derived CDs, focusing on their structural performance, cellular toxicity, and functional characteristics. The application of CDs in the food industry, including food packaging, is summarized in a concise manner. This paper sheds light on the current challenges and prospects of utilizing CDs in the packaging industry. It aims to provide researchers with a roadmap to tailor the properties of CDs to suit specific applications in the food industry, particularly in food packaging.