Functional oligosaccharides have emerged as valuable components of food and dietary supplements. Their resistance to digestion and fermentation by colonic microbes has given them the nutritional edge. Apart from implications as dietary fibers, sweeteners, and humectants, they are hailed as prebiotics. Their beneficial effects extend from antioxidant, anti-inflammatory, immunomodulatory, antiallergic, hypotensive, hyperlipemic, neuroprotective to anticancer. The rising popularity of bioactive oligosaccharides has accelerated the search for their generation from new, sustainable sources. The surfacing crucial role in healthcare and unprecedented demand necessitates deeper investigation. The present review embodies an overview on various aspects of production, properties with emphasis on therapeutic applications of functional oligosaccharides. The biological efficacy and possible mechanisms of action of oligosaccharides have also been discussed.