The food industry generate large amount of wastes or by-products annually around the world from a variety of sources. In that food wastes or by-products are an excellent source of nutraceuticals, bioactives, inherently functional and possess many components that are good for human health. Food wastes or by-products convert to the functional food ingredients it is the healthy trends in the food industry. The waste management is one of the major parts of food industries. The large volume of the low cost by-product gives economical advantage of its potentially valuable components and environmental benefits. Therefore, the recovery of by-products to health beneficial product and economic benefit to labour, stakeholder and country. As people become increasingly aware of the relation between diet and good health. Consumer attitude towards health foods is promising development and the scope of functional foods is growing in the world markets. Consumers believe that foods are taken directly effects on their health as a good or as a bad. Today foods are not only used to satisfy our hunger but also to provide essential nutrients for humans and these nutrients having the health benefits, protecting and controlling from the diseases. The market for the functional foods has seen a tremendous demand in the recent years. This review article enlists various food industries by products that are being commercially used in functional food ingredients for human consumption.