The plastic film mulching system has a significant role in increasing crop grain yields by changing the microenvironment of the plant. On the other hand, plastic mulching materials pollute the land and water because they are not degraded or disposed of properly. Biodegradable plastic mulches (BPM) may be used as a substitute for conventional low-density polyethylene (LDPE) to protect soil health. In this review, the effect of micro(nano)plastics on soil health and function has been discussed in light of their distribution in soil, changes in soil biochemistry, interactions between microplastics with soil microbes and plants, and their growth patterns. The nano-plastics are now incorporated into the food chain from the soil through plants and finally harm the whole ecosystem, including humans. The use of BPM has been practiced recently, but only 1% of the world’s total plastic production is from biodegradable materials. In the second part of the review, the confusing terms "bio-based" and "biodegradable" were clarified based on their polymeric constituents. The physical parameters of different constituent materials for mulching purposes and their capability for sustainable solarization have been discussed. The effect of biodegradable mulches on soil health and other ecotoxic effects on plants, soil microorganisms, and other soil dwellers like Daphnia magna, Vibrio fischeri bacteria, green algae, slime mould, protozoa, invertebrates like earthworms, and common water fleas have been focused on in this review. In conclusion, the use of BPM for mulching purposes was reported to improve crop quality and yield and reduce weed growth in comparison to naked soil. The recent short-term studies ensured that mulches stayed unbroken throughout the growing season. But simultaneously, the biodegradable mulches affect soil health and have a substantial impact on physical parameters such as soil pH, electrical conductivity, aggregate stability, infiltration, nitrate-N, exchangeable potassium, etc. Therefore, a lot of long-term research is required for the use of BPM as a substitute for conventional LDPE as a mulching film in the agricultural field.