Anaerobic biogranulation is an emerging wastewater treatment technology for industrial applications. As a result of increasing basic understanding and acceptance toward the anaerobic granular processes, a growing interest and confidence in the technology has resulted in a remarkable increase of full‐scale plants installed worldwide over the past few decades. While the technology is well accepted and much research work had been conducted on granule formation, insight unfolding the granulation remains unclear. This article presents a review documenting hypothetical elucidations on anaerobic granule formation and granulation mechanisms. The article also provides detailed discussion on applications of anaerobic granulation with emphasis on reactor systems, emission mitigations, and bioenergy production. Prospects and challenges of anaerobic granulation for wastewater treatment are also outlined.