Yellow bell pepper is a popular high value crop rich in vitamins, antioxidants and flavonoids. It is highly sensitive to high levels of carbon dioxide, so this property was capitalized to develop and optimize smart film labels for monitoring headspace CO₂ concentration of packaged bell pepper, indicating their quality. Strips of smart film, obtained at optimized conditions were attached inside the packages followed by low temperature storage. With progress in storage, the concentration of CO₂ increased which deteriorated the quality of the packaged bell pepper. A correlation was established between headspace CO₂ concentration and colour change of smart label. High value of Pearson correlation coefficient r (0.9605) and coefficient of determination R² (0.957) depicted that CO₂ ­concentration and colour difference of smart label have good correlation and the films can be used to monitor headspace carbon dioxide concentration and quality of packaged bell pepper in a non-destructive and real time manner.