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Hydrogen (H2) has attained significant benefits as an energy carrier due to its gross calorific value (GCV) and inherently clean operation. Thus, hydrogen as a fuel can lead to global sustainability. Conventional H2 production is predominantly through fossil fuels, and electrolysis is now identified to be most promising for H2 generation. This review describes the recent state of the art and challenges on ultra-pure H2 production through methanol electrolysis that incorporate polymer electrolyte membrane (PEM). It also discusses about the methanol electrochemical reforming catalysts as well as the impact of this process via PEM. The efficiency of H2 production depends on the different components of the PEM fuel cells, which are bipolar plates, current collector, and membrane electrode assembly. The efficiency also changes with the nature and type of the fuel, fuel/oxygen ratio, pressure, temperature, humidity, cell potential, and interfacial electronic level interaction between the redox levels of electrolyte and band gap edges of the semiconductor membranes. Diverse operating conditions such as concentration of methanol, cell temperature, catalyst loading, membrane thickness, and cell voltage that affect the performance are critically addressed. Comparison of various methanol electrolyzer systems are performed to validate the significance of methanol economy to match the future sustainable energy demands.