Carbon dots (CD) were developed via hydrothermal synthesis using potato peel as functional fillers for food packaging films. The CD showed strong antioxidant and antimicrobial activity with low cytotoxicity as more than 80% of mouse fibroblast L929 cells survived even when exposed to 500 μg/mL for 72 h. The CD was used as a functional filler for preparing a gelatin-based functional film, and it was uniformly dispersed in biopolymer, indicating a compatible packaging film. The FTIR result showed no change in the chemical structure, but an H-bond was apparent between the CD and gelatin. The addition of CD produced a highly transparent film with significant improvement in the water vapor permeability (by 28%) and hydrophobicity (by 9% and 13%) properties of the gelatin film without much changing of the mechanical properties. The CD-added gelatin films indicated UV-barrier property and strong antioxidant activity. Moreover, the antibacterial efficacy increased significantly. Therefore, the CD-added gelatin films have great potential as a value-added, low-cost, safe, and functional nanofiller for the preparation of packaging applications.