Vegetable parchment paper is a cellulose based material with excellent non-stick and grease resistant properties but lack of sealability restricts its application in food packaging. In this study, sealable Functional Nanocomposite Parchment Paper (FNPP) was developed by coating parchmentized paper with a PLA based nanocomposite containing Citrus limetta peel oleoresin and ZnO nanoparticles. Spectral characterisation of oleoresin showed a maximum absorption at 270nm and displayed 82.4% radical scavenging activity. FNPP exhibited a sealing strength of 202 N•m⁻¹, antioxidant activity of 30.2% with significant antimicrobial properties. SEM-EDX revealed a smooth coating with uniformly distributed ZnO nanoparticles. FTIR and XRD analyses confirmed the successful incorporation of PLA, oleoresin, and ZnO nanoparticles within the parchment matrix. FNPP showed antimicrobial activity against E. coli and S. aureus, with inhibition zones of 14 mm and 11 mm, respectively, with improved bursting strength, smoothness, porosity, and water resistance compared to the control. Packaging trials with paneer demonstrated enhanced microbial stability, moisture retention, reduced acidity and extending shelf life which highlighting FNPP's potential as an eco-friendly active food packaging material.