Peanut shells (PSs) generated from agricultural waste contain valuable compounds with bioactive properties such as anti-aging, antimicrobial, and antioxidant properties, making it desirable to recycle them as a sustainable resource. The aim of this study is to design an effective luteolin recovery process as the first step of an integrated biorefinery utilizing PSs as raw material. The major extraction variables and their ranges for luteolin recovery from PSs were determined (0-60 °C, 1-5 h, 0-100% MeOH concentration) and a predictive model was derived through a response surface methodology (RSM). Based on the predictive model, the equation determined for the maximal extraction of luteolin at 1 h was as follows: y = -1.8475x + 159.57, and the significant range of variables was as follows: 33.8 °C ≤ temperature (x) ≤ 48.5 °C and 70.0% ≤ MeOH concentration (y) ≤ 97.5%, respectively. High antioxidant and elastase inhibitory activities of PS extracts were confirmed, and these results support their potential to be used as functional materials. In addition, 39.2% of the solid residue after extraction was carbohydrate, which has potential as a carbon source for fermentation. This study provides a useful direction on an integrated biorefinery approach for sustainable agricultural waste valorization.