The feasibility study of using carrot peels, by-products from food industry, as a starting raw material to produce antioxidant dietary fiber powder was investigated in this work. The effects of blanching and hot air drying (60–80 °C) on the drying kinetics and physicochemical properties of dietary fiber powder were first evaluated. The results showed that blanching had a significant effect on the fiber contents and compositions, water retention and swelling capacities of the fiber powder. In contrast, drying temperature in the selected range did not affect the hydration properties. In terms of the antioxidant activity, thermal degradation during both blanching and drying caused a decrease in the contents of β-carotene and phenolic compounds, hence leading to the loss of antioxidant activity of the final product.