This review highlights recent progress in the sustainable extraction, production and application of plant fiber-reinforced biopolymer composites. The review mainly focuses on properties of these materials—mechanical, thermal, and interfacial—and explores how factors such as fiber type, extraction methods, and surface treatments (e.g., enzymatic retting, deep eutectic solvents, steam explosion) affect fiber morphology and bonding with the polymer matrix. The work also discusses strategies to select and modify biopolymer matrices (e.g., PLA, PHA) for better compatibility, recyclability, and long-term performance, addressing challenges like fire resistance and environmental impact. Special attention is given to cellulose surface modification, which improves wettability and interfacial adhesion, while highlighting alternatives to conventional chemical treatments due to cellulose’s high crystallinity and strong hydrogen bonding. Despite advances in surface treatments and manufacturing, persistent challenges include moisture sensitivity, processing reproducibility, and standardization. Future research should prioritize application-tailored extraction, scalable eco-friendly modifications, and standardized testing to optimize durability and circular economy alignment. These fiber-reinforced biopolymer composites offer a viable path to fossil-free, high-performance materials. Overall, this review provides a comprehensive perspective that bridges sustainability and industrial applicability, offering practical guidance for developing high-performance, eco-friendly composites.