Recently, as concerns about petrochemical-derived polymers increase, interest in biopolymer-based materials is increasing. Undoubtedly, biopolymers are a better alternative to solve the problem of synthetic polymer-based plastics for packaging purposes. There are various types of biopolymers in nature, and mostly polysaccharides are used in this regard. Carrageenan is a hydrophilic polysaccharide extracted from red algae and has recently attracted great interest in the development of food packaging films. Carrageenan is known for its excellent film-forming properties, high compatibility and good carrier properties. Carrageenan is readily available and low cost, making it a good candidate as a polymer matrix base material for active and intelligent food packaging films. The carrageenan-based packaging film lacks mechanical, barrier, and functional properties. Thus, the physical and functional properties of carrageenan-based films can be enhanced by blending this biopolymer with functional compounds and nanofillers. Various types of bioactive ingredients, such as nanoparticles, natural extracts, colorants, and essential oils, have been incorporated into the carrageenan-based film. Carrageenan-based functional packaging film was found to be useful for extending the shelf life of packaged foods and tracking spoilage. Recently, there has been plenty of research work published on the potential of carrageenan-based packaging film. Therefore, this review discusses recent advances in carrageenan-based films for applications in food packaging. The preparation and properties of carrageenan-based packaging films were discussed, as well as their application in real-time food packaging. The latest discussion on the potential of carrageenan as an alternative to traditionally used synthetic plastics may be helpful for further research in this field.