Fiber-enriched food has numerous health benefits. This study develops functional fiber-enriched pasta (FEP) by partially substituting wheat flour for alcohol-insoluble residue prepared from potato peel byproducts (AIR-PPB) at various particle sizes (PS). The independent variables’ effects, AIR-PPB at 2–15% substitution levels, and PS 40–250 µm were investigated in terms of chemical, cooking, thermal, and sensory properties. AIR-PPB is rich in total dietary fibers (TDF) (83%), exhibiting high water-holding capacity (WHC) and vibrant colors. Different concentrations of AIR-PPB increase TDF content in FEPs by 7–21 times compared to the control pasta (CP). Although the optimal cooking time (OCT) decreases by 15–18% compared to CP, where a lower OCT should reduce cooking time and save energy, cooking loss (Cl) increases slightly but remains within an acceptable range of 8%. Additionally, AIR-PPB altered the texture properties of FEP, with a moderate decrease in mass increase index (MII), firmness, and stickiness. AIR-PPB impairs the gluten network’s structure in pasta due to AIR-PPB’s WHC, which competes with starch for water binding, increasing the starch gelatinization temperature. FEPs show an increased lightness and yellowness and improved sensory properties. Highly acceptable FEPs were obtained for the following substitution levels: FEP11 (AIR-PPB at 2% and PS of 145 µm), FEP9 (AIR-PPB 4% level with PS of 70 µm), FEP6 (AIR-PPB of 4% level with 219 µm PS), and FEP1 (AIR-PPB = 8.5% with 40 µm PS), as compared to other FEPs.