Circular RNAs (circRNAs) are a novel type of universal and diverse endogenous noncoding RNAs (ncRNAs) and they form a covalently closed continuous loop without 5′ or 3′ tails unlike linear RNAs. Most circRNAs are presented with characteristics of abundance, stability, conservatism, and often exhibiting tissue/developmental-stage-specific expression. CircRNAs are generated either from exons or introns by back splicing or lariat introns. CircRNAs play important roles as miRNA sponges, gene transcription and expression regulators, RNA-binding protein (RBP) sponges and protein/peptide translators. Emerging evidence revealed the function of circRNAs in cancer and may potentially serve as a required novel biomarker and therapeutic target for cancer treatment. In this review, we discuss about the origins, characteristics and functions of circRNA and how they work as miRNA sponges, gene transcription and expression regulators, RBP sponges in cancer as well as current research methods of circRNAs, providing evidence for the significance of circRNAs in cancer diagnosis and clinical treatment.