Growing environmental concerns and the need to adopt a circular economy have highlighted the importance of waste valorization for resource recovery. Microbial consortia-enabled biotechnologies have made significant developments in the biomanufacturing of valuable resources from waste biomass that serve as suitable alternatives to petrochemical-derived products. These microbial consortia are designed following a top-down or bottom-up engineering approach. The top-down approach is a classical method that uses environmental variables to selectively steer an existing microbial consortium to achieve a target function. While high-throughput sequencing has enabled microbial community characterization, the major challenge is to disentangle complex microbial interactions and manipulate the structure and function accordingly. Microbial consortia design through a bottom-up approach uses prior knowledge of the metabolic pathway and possible interactions among consortium partners to design and engineer synthetic microbial consortia. This strategy offers some control over the composition and function of the consortium for targeted bioprocesses, but challenges remain in optimal assembly methods and long-term stability. In this review, we present the recent advancements, challenges, and opportunities for further improvement using top-down and bottom-up approaches for microbiome engineering. As the bottom-up approach is relatively a new concept for waste valorization, this review explores the assembly and design of synthetic microbial consortia, ecological engineering principles to optimize microbial consortia, and metabolic engineering approaches for efficient conversion. Integration of top-down and bottom-up approaches along with developments in metabolic modeling to predict and optimize consortia function are also highlighted.