Recently, there has been a growing interest in reducing waste to promote environmental sustainability, with particular focus on agricultural by-products, especially fruits and vegetables. Potato, a widely used crop across various industries, generates a significant amount of peel waste. This study aims to valorize potato peels using water bath extraction (WBE) and infrared-assisted extraction (IRAE), both with distilled water as the solvent, followed by assessments of antioxidant, antibacterial, and anti-sprouting activities. Optimization using response surface methodology identified optimal extraction conditions for WBE (90 °C for 70 min) and IRAE (80 °C for 10 min), with both methods yielding 3.5 mg GAE/g DM in polyphenol content. IRAE demonstrated superior energy efficiency and enhanced antioxidant activity. The extracts exhibited antibacterial properties against both Gram-positive (Listeria monocytogenes) and Gram-negative bacteria (Proteus sp. and Salmonella sp.), with inhibition zones ranging from 10 to 14 mm. Furthermore, the potato peels extract showed significant anti-sprouting effects at room temperature, reducing both the number and size of sprouts compared with the control. HPLC analysis showed the presence of different phenolic compounds such as rutin, catechin, caffeic acid, protocatechuic acid, chlorogenic acid, p-coumaric acid, and gallic acid in one or both extracts. These findings suggest that potato peels extract holds potential for applications in the food industry as a natural preservative due to its antioxidant properties, as well as a sprout suppressant. The antibacterial activity of the extracts suggests their potential as a natural preservative as well, offering protection against both Gram-positive and Gram-negative bacteria that may be present in food.