White tea has gained significant popularity worldwide due to its health benefits. As the least processed type of tea, white tea is known for preserving a high level of bioactive phytochemicals from fresh tea leaves. However, the composition of white tea can vary widely depending on factors such as harvest season, processing methods, and storage conditions. To effectively utilize the bioactive compounds in white tea, the extraction process plays a crucial role, and researchers have been actively exploring optimal parameters and innovative techniques to improve extraction efficiency. Additionally, extensive research is being conducted to uncover the diverse functionalities of white tea, leading to new discoveries and insights into its applications in the food and therapeutic industries. This review provides an overview of the compositional profiles of different white teas, highlights advances in the optimization of white tea extraction, and provides up-to-date literature on the diverse functional properties of white tea.