The growing demand for sustainable and eco-friendly food packaging has prompted research on innovative solutions to environmental and consumer health issues. To enhance the properties of smart packaging, the incorporation of bioactive compounds derived from various natural sources has attracted considerable interest because of their functional properties, including antioxidant and antimicrobial effects. However, extracting these compounds from natural sources poses challenges because of their complex chemical structures and low concentrations. Traditional extraction methods are often environmentally harmful, expensive and time-consuming. Thus, green extraction techniques have emerged as promising alternatives, offering sustainable and eco-friendly approaches that minimise the use of hazardous solvents and reduce environmental impact. This review explores cutting-edge research on the green extraction of bioactive compounds and their incorporation into smart packaging systems in the last 10 years. Then, an overview of bioactive compounds, green extraction techniques, integrated techniques, green extraction solvents and their application in smart packaging was provided, and the impact of bioactive compounds incorporated in smart packaging on the shelf lives of food products was explored. Furthermore, it highlights the challenges and opportunities within this field and presents recommendations for future research, aiming to contribute to the advancement of sustainable and efficient smart packaging solutions.