Lipopeptides (LPs) are secondary metabolites produced by a diversity of bacteria and fungi. Their unique chemical structure comprises both a peptide and a lipid moiety. LPs are of major biotechnological interest owing to their emulsification, antitumor, immunomodulatory, and antimicrobial activities. To date, these versatile compounds have been applied across multiple industries, from pharmaceuticals through to food processing, cosmetics, agriculture, heavy metal, and hydrocarbon bioremediation. The variety of LP structures and the diversity of the environments from which LP-producing microorganisms have been isolated suggest important functions in their natural environment. However, our understanding of the ecological role of LPs is limited. In this review, the mode of action and the role of LPs in motility, antimicrobial activity, heavy metals removal and biofilm formation are addressed. We include discussion on the need to characterise LPs from a diversity of microorganisms, with a focus on taxa inhabiting ‘extreme’ environments. We introduce the use of computational target fishing and molecular dynamics simulations as powerful tools to investigate the process of interaction between LPs and cell membranes. Together, these advances will provide new understanding of the mechanism of action of novel LPs, providing greater insights into the roles of LPs in the natural environment.