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Packaging waste accounted for 78.81 million tons or 31.6% of the total municipal solid waste (MSW) in 2003 in the USA, 56.3 million tons or 25% of the MSW in 2005 in Europe, and 3.3 million tons or 10% of the MSW in 2004 in Australia. Currently, in the USA the dominant method of packaging waste disposal is landfill, followed by recycling, incineration, and composting. Since landfill occupies valuable space and results in the generation of greenhouse gases and contaminants, recovery methods such as reuse, recycling and/or composting are encouraged as a way of reducing packaging waste disposal. Most of the common materials used in packaging (i.e., steel, aluminum, glass, paper, paperboard, plastics, and wood) can be efficiently recovered by recycling; however, if packaging materials are soiled with foods or other biological substances, physical recycling of these materials may be impractical. Therefore, composting some of these packaging materials is a promising way to reduce MSW. As biopolymers are developed and increasingly used in applications such as food, pharmaceutical, and consumer goods packaging, composting could become one of the prevailing methods for disposal of packaging waste provided that industry, governments, and consumers encourage and embrace this alternative. The main objective of this article is to provide an overview of the current situation of packaging compostability, to describe the main mechanisms that make a biopolymer compostable, to delineate the main methods to compost these biomaterials, and to explain the main standards for assessing compostability, and the current status of biopolymer labeling. Biopolymers such as polylactide and poly(hydroxybutyrate) are increasingly becoming available for use in food, medical, and consumer goods packaging applications. The main claims of these new biomaterials are that they are obtained from renewable resources and that they can be biodegraded in biological environments such as soil and compost. Although recycling could be energetically more favorable than composting for these materials, it may not be practical because of excessive sorting and cleaning requirements. Therefore, the main focus is to dispose them by composting. So far, there is no formal agreement between companies, governments and consumers as to how this packaging composting will take place; therefore, the main drivers for their use have been green marketing and pseudo-environmental consciousness related to high fuel prices. Packaging compostability could be an alternative for the disposal of biobased materials as long as society as a whole is willing to formally address the challenge to clearly understand the cradle-to-grave life of a compostable package, and to include these new compostable polymers in food, manure, or yard waste composting facilities.