The current trend of using plastic material in the manufacturing of packaging products raises serious environmental concerns due to waste disposal on land and in oceans and other environmental pollution. Natural polymers such as cellulose, starch, chitosan, and protein extracted from renewable resources are extensively explored as alternatives to plastics due to their biodegradability, biocompatibility, nontoxic properties, and abundant availability. The tensile and water vapor barrier properties and the environmental impacts of natural polymers played key roles in determining the eligibility of these materials for packaging applications. The brittle behavior and hydrophilic nature of natural polymers reduced the tensile and water vapor barrier properties. However, the addition of plasticizer, crosslinker, and reinforcement agents substantially improved the mechanical and water vapor resistance properties. The dispersion abilities and strong interfacial adhesion of nanocellulose with natural polymers improved the tensile strength and water vapor barrier properties of natural polymer-based packaging films. The maximum tensile stress of these composite films was about 38 to 200% more than that of films without reinforcement. The water vapor barrier properties of composite films also reduced up to 60% with nanocellulose reinforcement. The strong hydrogen bonding between natural polymer and nanocellulose reduced the polymer chain movement and decreased the percent elongation at break up to 100%. This review aims to present an overview of the mechanical and water vapor barrier properties of natural polymers and their composites along with the life cycle environmental impacts to elucidate their potential for packaging applications.