Discharges of huge quantities of leather solid wastes by leather industries and the increased use of synthetic packaging films have raised serious concerns on account of their environmental impacts. The paper focuses on the development and characterization of potential environmentally friendly composite films using collagen hydrolysate (CH) extracted from leather solid wastes and chitosan (C) to assess the feasibility of producing polymeric materials suitable for applications in packaging and wrapping purposes. Solid collagen-based protein hydrolysate was extracted from chromium-tanned leather wastes and analyzed to determine its chemical properties. With the goal of improving the physico-chemical performance of CH, three types of composite films (CH75/C25, CH50/C50, CH25/C75) were prepared with increasing concentrations of C, and some of their physical and functional properties were characterized. The results indicated that the addition of C caused increase (p < 0.05) in the thickness, tensile strength (TS), elasticity modulus (EM), and water vapor permeability (WVP), leading to stronger films as compared with CH film, but significantly (p < 0.05) decreased the elongation at break (EAB) and solubility of films (p < 0.05). The light barrier measurements present low values of transparency at 600 nm of the CH/C films, indicating that the films are very transparent and they have excellent barrier properties against UV light. The structural properties investigated by FTIR and DSC showed total miscibility between both polymers. Scanning electron micrographs revealed that CH/C composite films showed a compact homogeneous structure. These results demonstrate the potential application of CH/C composite films in packaging industry.