The fast development of unmanned aerial vehicles (UAVs), commonly known as drones, has brought a unique set of opportunities and challenges to both the civilian and military sectors. While drones have proven useful in sectors such as delivery, agriculture, and surveillance, their potential for abuse in illegal airspace invasions, privacy breaches, and security risks has increased the demand for improved detection and classification systems. This state-of-the-art review presents a detailed overview of current improvements in drone detection and classification techniques: highlighting novel strategies used to address the rising concerns about UAV activities. We investigate the threats and challenges faced due to drones’ dynamic behavior, size and speed diversity, battery life, etc. Furthermore, we categorize the key detection modalities, including radar, radio frequency (RF), acoustic, and vision-based approaches, and examine their distinct advantages and limitations. The research also discusses the importance of sensor fusion methods and other detection approaches, including wireless fidelity (Wi-Fi), cellular, and Internet of Things (IoT) networks, for improving the accuracy and efficiency of UAV detection and identification.