Hydrogenation of CO2 represents a promising pathway for converting it into valuable hydrocarbons and clean fuels like dimethyl ether (DME). Despite significant research, several challenges persist, including a limited understanding of reaction mechanisms, thermodynamics, the necessity for catalyst design to enhance DME selectivity, and issues related to catalyst deactivation. The paper provides a comprehensive overview of recent studies from 2012 to 2023, covering various aspects of CO2 hydrogenation to methanol and DME. This review primarily focuses on advancing the development of efficient, selective, and stable innovative catalysts for this purpose. Recent investigations that have extensively explored heterogeneous catalysts for CO2 hydrogenation were summarized. A notable focus is on Cu-based catalysts modified with promoters such as Zn, Zr, Fe, etc. Additionally, this context delves into thermodynamic considerations, the impact of reaction variables, reaction mechanisms, reactor configurations, and recent technological advancements, such as 3D-printed catalysts. Furthermore, the paper examines the influence of different parameters on catalyst deactivation. The review offers insights into direct CO2 hydrogenation to DME and proposes paths for future investigation, aiming to address current challenges and advance the field.