Plastic packaging waste has emerged as a critical environmental challenge due to its persistence, low degradation rates, and increasing accumulation in terrestrial and marine ecosystems. Conventional petroleum-based plastics dominate packaging applications because of their durability and low cost; however, their environmental impacts have prompted urgent demand for sustainable alternatives. Bio-based and compostable packaging materials offer promising solutions by utilizing renewable resources and enabling environmentally benign end-of-life pathways. This paper examines the development of bio-based and compostable packaging alternatives aimed at reducing plastic waste. Through a systematic review of material innovations, processing technologies, and life-cycle considerations, the study evaluates the performance, environmental benefits, and limitations of emerging bio-based packaging solutions. The findings indicate that materials such as polylactic acid, polyhydroxyalkanoates, starch-based composites, and cellulose-derived packaging can significantly reduce fossil resource dependency and plastic pollution when supported by appropriate infrastructure. The paper concludes that while bio-based and compostable packaging presents strong environmental potential, successful large-scale adoption requires integrated design strategies, composting infrastructure, and supportive policy frameworks.