Food upcycling has emerged as an effective approach to sustainably utilize the food waste generated within the food supply chain. This review article examines upcycled food with respect to its definition, consumers’ knowledge and perception on it, and the process by which by-products from the food supply chain are utilized for the creation of upcycled food products. The definition of upcycled food varied among manufacturers, research institutions, and the Upcycled Food Association, depending on the specific values and objectives of each sector. This has resulted in the use of different keywords to highlight the distinctive characteristics of their respective interpretations of upcycled food. This review also summarizes the various consumer traits that can influence the awareness and acceptance of upcycled food, encompassing functional, empirical and emotional, symbolic and self-expressive, and economic benefits. Additionally, the review presents strategies to utilize by-products produced in large quantities in Korea, while also addressing the control of hazardous components to ensure biological or chemical safety and the changes in nutritional value that may occur during the utilization of these byproducts.