The incorporation of natural fillers such as seaweed may potentially enhance the properties of biopolymer films. In this study, we investigated the effect of seaweed powder as a bio-filler in alginate-based films at different concentrations (10, 30, and 50%, w/w alginate) and particle sizes (100 and 200 μm) on the mechanical, barrier, antioxidant, and antimicrobial properties of alginate which are essential for food packaging applications. Initially, mechanical properties of the alginate films prepared at different temperatures were evaluated to find the optimal temperature for preparing alginate solution. The addition of seaweed powder did not have any positive effect on the mechanical properties of the alginate films. However, the barrier (water vapor transmission rate) and antioxidant properties were improved with the addition of seaweed filler regardless of concentration. In addition, selected films were prepared in plasma-activated water (PAW). The mechanical properties (tensile strength, but not elongation at break) of the films prepared with PAW improved compared to the films prepared in distilled water, while a significant decrease was observed when incorporated with the seaweed filler. The films prepared in PAW also showed improved barrier properties compared to those prepared in distilled water. The antimicrobial activity of the alginate-seaweed film-forming solution was in general more pronounced when prepared with PAW and stored at 10 °C, particularly at the highest concentration of the film-forming solution (83.3% v/v). A more pronounced inhibitory effect was observed on the Gram-positive S. aureus than on the Gram-negative E. coli, which has been attributed to the different composition and structure of the respective cell walls. This study has demonstrated the potential of seaweed filler in combination with PAW towards enhanced functionality and bioactivity of alginate films for potential food packaging applications.