An agricultural waste, pomegranate (Punica granatum L.) peel is known to be rich in total phenolics, which are flavonoids having strong antioxidant effects. In this study, pomegranate peel sponge cakes were prepared with varying ratios of freeze dried pomegranate peel powder (0, 1, 3, 5, 7% (w/w)) to examine their effect on quality characteristics, retrogradation and antioxidant activities. The specific gravity and moisture contents of 3, 5, and 7% pomegranate peel powder showed higher values than the control and 1% group. Addition of pomegranate peel powder increased the batter yield, while there was a significant decrease in baking loss. Increasing pomegranate peel powder content significantly decreased the lightness (L) (from 75.03 to 57.04) and pH values, whereas redness (a), yellowness (b) and ΔE were increased. Increasing concentration of the peel powder also increased the hardness and chewiness, while the springiness and cohesiveness decreased. Considering the Avrami equation, Avrami exponene (n) decreased from 1.8055 (control) to 0.9199 (7% pomegranate peel powder). Time constant (1/k) was lowest in control (at 17.64) and highest in the 7% group (39.84). Total polyphenol, flavonoid content, DPPH and ABTS radical scavenging activities significantly increased with increments in the content of pomegranate peel powder. A sensory evaluation by the 7-point scaling method showed that the sponge cake containing 7% pomegranate peel powder had the highest scores in color, flavor, sweetness, chewiness and overall acceptability. Hence, it is considered that sponge cake supplemented with 7% pomegranate peel powder is the most appropriate for quality characteristics, retrogradation and antioxidant activities.