Lumbar puncture is a minimally invasive procedure that utilizes a spinal needle to puncture the lumbar epidural space to take a sample from the cerebrospinal fluid or inject drugs for diagnostic and therapeutic purposes. Physicians rely on their expertise to localize epidural space. Due to its critical procedure, the failure rate can reach up to 28%. Hence, a high level of experience and caution is required to correctly insert the needle without puncturing the dura mater, which is a fibrous layer protecting the spinal cord. Failure of spinal anesthesia is, in some cases, related to faulty needle placement techniques since it is blindly inserted. Therefore, advanced techniques for localization of the epidural space are essential to avoid any possible side effects. As for epidural space localization, various ideas were carried out over recent years to provide accurate identification of the epidural space. Subsequently, several methodologies based on mechanical and optical schemes have been proposed. Several research groups worked from different aspects of the problem, namely, the clinical and engineering sides. Hence, the main goal of this paper is to review this research with the aim of remedying the gap between the clinical side of the problem and the engineering side by examining the main techniques in building sensors for such purposes. This manuscript provides an understanding of the clinical needs of spinal needles from an anatomical point of view. Most importantly, it discusses the mechanical and optical approaches in designing and building sensors to guide spinal needles. Finally, the standards that must be followed in building smart spinal needles for approval procedures are also presented, along with some insight into future directions.