Due to increasing anthropogenic activities, especially industry and transport, the fossil fuel demand and consumption have increased proportionally, causing serious environmental issues. This attracted researchers and scientists to develop new alternative energy sources. Therefore, this review covers the biofuel production potential and challenges related to various feedstocks and advances in process technologies. It has been concluded that the biofuels such as biodiesel, ethanol, bio-oil, syngas, Fischer–Tropsch H_2, and methane produced from crop plant residues, micro- and macroalgae and other biomass wastes using thermo-bio-chemical processes are an eco-friendly route for an energy source. Biofuels production and their uses in industries and transportation considerably minimize fossil fuel dependence. Literature analysis showed that biofuels generated from energy crops and microalgae could be the most efficient and attractive process. Recent progress in the field of biofuels using genetic engineering has larger perspectives in commercial-scale production. However, its large-scale production is still challenging; hence, to resolve this problem, it is essential to convert biomass in biofuels by developing novel technology to increase biofuel production to fulfil the current and future energy demand.