Peptidoglycan (PGN) is the primary component of bacterial cell walls, consisting of linear glycan chains formed by alternating linkages of N‐acetylglucosamine (NAG) and N‐acetylmuramic acid (NAM) through glycosidic bonds. It exhibits biological activity in various aspects, making it a biologically significant macromolecule with extensive industrial application. This review aims to explore the latest research advancements in the extraction techniques, structural characterization, functions, and applications of PGN. The review compares the advantages and limitations of traditional chemical lysis methods with modern mechanical‐assisted and bio‐assisted extraction techniques, discusses chemical composition analysis techniques and structural characterization methods of PGN. The review emphasizes the potential of PGN in immune modulation, specific recognition, and adsorption functions. Furthermore, the review examines potential applications of PGN in vaccine development, the livestock industry, the removal of harmful substances, and protein bioprocessing. In the end, based on the current development trend, future research directions for PGN are proposed, including in‐depth studies on the mechanisms of PGN in different hosts and its immunomodulatory effects in various disease models. It is expected that a comprehensive reference framework for the research and application of PGN will be provided through this review, offering ideas and directions for further development and utilization.