Formalin (aqueous solution of formaldehyde stabilized with methanol) is one of the most used disinfectants in aquaculture. It is used to eliminate infectious agents but may be responsible for negative effects on fish and water quality. This work focuses on physical–chemical properties of formalin and on its reactions and its use in intensive aquaculture and in environment. The types of treatments and the action mode of formalin are also described. The main consequences of formalin exposure to fish are damage in gills and alterations in mucous cells. Formalin also interacts with some treatments adopted in aquaculture establishments, for example biological filter, where the nitrification process seems to be strongly affected. With respect to formalin inactivation, formaldehyde (effluent) may be diluted with water or specific treatments should be conducted to decrease the concentration levels before its discharge into the environment. The common methodologies applied to aquaculture are not completely efficient on formalin removal from water, and the advanced oxidation processes may be a good alternative.