Biogas production is a well-established technique that may be used to generate sustainable energy as well as valorize organic waste. Biogas is the end result of a biologically mediated process known as anaerobic digestion, in which different microbes degrade organic materials through various metabolic pathways. Since ancient times, the technique has been extensively used in private homes to provide heat and electricity for hundreds of years. The biogas industry is booming these days, and new breakthroughs are laying the groundwork for biogas facilities to become sophisticated bioenergy manufacturers. In this context, biogas plants serve as the foundation for a circular economy model that focuses on nutrient recycling, greenhouse gas reduction, and biorefinery applications. This study covers the current state-of-the-art in anaerobic digestion for biogas generation and discusses future prospects. Furthermore, a historical overview of the biogas industry from its inception to current advances provides insight into the process optimization possibilities that are emerging.