The valorization of potato peel waste into biodegradable materials offers a sustainable approach to reducing plastic pollution. Starch extracted by wet sedimentation yielded 17.10% with high purity (ash 0.47%, moisture 14.00%, amylose 21.20%, amylopectin 78.80%). Bioplastic films prepared using glycerol, sorbitol, and a glycerol–sorbitol blend were evaluated for physical, mechanical, optical, structural, and biodegradation characteristics. Glycerol-plasticized films showed the greatest flexibility, highest swelling (47.0 ± 3.0%) and water absorption (48.6 ± 3.40%), and the fastest biodegradation, reaching 95.62 ± 9.78% weight loss after 20 days. Sorbitol films exhibited the highest tensile strength (38.11 ± 1.52 N/cm2) and lowest water absorption (28.8 ± 1.15%), while blend films demonstrated intermediate mechanical performance and slower degradation (64.16 ± 5.41%). FTIR confirmed preservation of the starch backbone with plasticizer-dependent hydrogen bonding, and XRD indicated a semi-crystalline structure (crystallinity index 91.6%) in glycerol films. Application trials showed strong adhesion of glycerol films as leak-proof paper cup coatings and successful moulding into 3D shapes. Overall, glycerol-plasticized potato peel starch films emerged as the most promising formulation due to their flexibility, rapid biodegradability, and practical applicability for sustainable packaging.