This paper presents the state-of-the-art and reviews the state-of-research of acoustic sensors used for a variety of navigation and guidance applications on air and surface vehicles. In particular, this paper focuses on echolocation, which is widely utilized in nature by certain mammals (e.g., cetaceans and bats). Although acoustic sensors have been extensively adopted in various engineering applications, their use in navigation and guidance systems is yet to be fully exploited. This technology has clear potential for applications in air and surface navigation/guidance for intelligent transport systems (ITS), especially considering air and surface operations indoors and in other environments where satellite positioning is not available. Propagation of sound in the atmosphere is discussed in detail, with all potential attenuation sources taken into account. The errors introduced in echolocation measurements due to Doppler, multipath and atmospheric effects are discussed, and an uncertainty analysis method is presented for ranging error budget prediction in acoustic navigation applications. Considering the design challenges associated with monostatic and multi-static sensor implementations and looking at the performance predictions for different possible configurations, acoustic sensors show clear promises in navigation, proximity sensing, as well as obstacle detection and tracking. The integration of acoustic sensors in multi-sensor navigation systems is also considered towards the end of the paper and a low Size, Weight and Power, and Cost (SWaP-C) sensor integration architecture is presented for possible introduction in air and surface navigation systems.