The global agri-food industry generates substantial quantities of by-products and waste streams, presenting both environmental challenges and opportunities for resource recovery within circular bioeconomy frameworks. Controlled fermentation has emerged as a versatile biotechnological platform for valorizing agricultural by-products through microbial biotransformation, yielding diverse bioactive compounds including phenolic derivatives, bioactive peptides, organic acids, and exopolysaccharides with demonstrated nutraceutical potential. However, the practical application of these fermentation-derived bioactives in functional food systems is constrained by inherent physicochemical instability, poor aqueous solubility, and rapid degradation during gastrointestinal transit. Nanotechnology-enabled sustained release systems, encompassing polymeric nanoparticles, liposomes, nanoemulsions, and solid lipid nanoparticles, offer transformative solutions for protecting sensitive compounds while enabling controlled, site-specific delivery. This review examines the integration of controlled fermentation strategies for agricultural by-product valorization with advanced nanoencapsulation technologies for bioactive stabilization and sustained release. We discuss process optimization parameters in fermentation systems, characterize the spectrum of bioactive compounds generated, and evaluate the mechanisms and applications of various nanocarrier systems in functional food development and agricultural sustainability contexts. Challenges including scalability, regulatory compliance, and safety assessment are addressed alongside future perspectives on precision fermentation, stimuli-responsive delivery systems, and translational pathways toward commercial implementation.