Background:: Innovative application of processing is an emerging trend in food production. Objective:: The present study was conducted to produce peanut butter and evaluate the physical, chemical, and sensory properties of the product, to which the outer shells of peanuts were added in different proportions (5, 10, 15%) to reduce the calories of the product by reducing the fat content in the peanut butter as well as benefiting from the shells as a residue secondary to the peanut seeds. Methods:: The chemical composition of the prepared sample, along with bioactive determination Using HPLC, microbial testing, Aflatoxin content, and sensory evaluation, have been done for the prepared peanut butter using standard methods. Results:: The chemical composition of the peanut outer shell powder was characterized by the highest value of fiber (46.6%), followed by total carbohydrates and protein (23.25%, (12.54%) respectively. The produced peanut butter showed that the total carbohydrate resulted in the highest value (23.25%), followed by fat (42.21) and protein (28.12%). Substitution at 5, 10, and 15% peanut outer shell resulted in a non-significant difference concerning protein. At the same time, the lipid content showed a significant decrease compared to the control. A similar trend was found concerning total carbohydrate-to-fat content. Total fiber increased to 1.5 & 2.08, and 2.6 times as high as the content parallel to dietary fiber, while β-Carotene decreased significantly due to the substitution level. The substitution level decreased energy (cal) by about 203.58, 730.093, 562.86, 545.19, and 526.66, respectively, compared with the control. A slight increase was found in the mineral content due to the substitution, except for the calcium increases at 15%. DPPH and ABTS% increased in parallel with the substitution level, which was in line with total phenols and flavonoids. Flavonoid fraction resulted in nariagin (94.72 QE), the major flavonoid, followed by lutein (82.23 QE). Meanwhile, phenolic compounds were described with pyrogallol (68.31 GAE) (as the main compound, followed by chlorogenic (780.76 GAE). The fatty acid composition showed that oleic and linoleic were predominant in all treatments. Bacterial, yeast, and mold counts appeared after three months of storage (20 ± 2°C). Aflatoxin was not detectable in the sample of the peanut outer shells and peanut butter samples. Sensory characteristics showed approximately the same score for all treatments except that of 15% substitution, which resulted in a significant decrease in all parameters compared with the control. Conclusion:: This study reported that 5%, followed by 10% of peanut outer shells, were the most suitable levels for making peanut butter, improving the nutritional value by increasing the percentage of fiber and antioxidants in peanut shells, leading to better quality products and shelf life.