Prickly pear peel makes up around half of the fruit and is typically thrown away, creating an environmental issue. Due to its high bioactive chemical content, prickly pear peel can easily be used as a functional and nutraceutical ingredient in several food recipes, such as baked products. This study’s objective was to determine whether prickly pear peel flour (PPPF) could successfully be combined (5, 10, and 15%) with wheat flour to make cakes, by analyzing the physical and chemical characteristics of the cakes and performing a descriptive sensory analysis. Prickly pear peel flour contains high amounts of fiber, ash, carbohydrate, phenolic, flavonoid compounds, or antioxidant activity. In addition, PPPF contains high amounts of magnesium, calcium, sodium and potassium. The ethanolic extract of prickly pear peel revealed the presence of 11 phenolic compounds using UPLC-MS/MS. The main constituents in the peel extract were isorhamnetin (27.1%), eucomic acid (19.6%), kaempferol (14.07%), 3-O-Methylquercetin (13.7%), Feruloyl-D-glucose (10.01%) and piscidic acid (8.89%). Results showed that adding PPPF significantly enhanced the amount of fibers, total polyphenols, flavonoids and minerals in the cakes prepared by the addition of 5, 10 and 15% PPPF as compared to the control cake. Moreover, the addition of different levels of PPPF increased antioxidant activity (DPPH and ABTS%) and decreased thiobarbituric acid reactive substances (TBARS) in cakes as compared to the control cake. The descriptive sensory analysis ultimately revealed that cakes made with 10% prickly pear flour received a higher score for their smell, taste or color. In conclusion, prickly pear peel has antioxidant potential and contains biochemical compounds that can be utilized in the enhancement of functional foods and also help to reduce the waste accumulation that causes environmental issues.