Over the last few years, many classifications have been proposed for functionally graded materials (FGMs). In this Paper, critical review of different available classifications for FGM based on their physical, structural and manufacturing characteristics are presented. Advantages and limitations of each fabrication method for use in a given application is correspondingly considered. In addition, new classifications based on gradation control and accuracy, residual stresses, specific energy consumption, environmental impact evaluated throughout the complete life cycle and manufacturing costs are proposed. These classifications mainly reflect the needs of both FGM designers and industrial manufacturers. Based upon the presented classifications and the recent advances in analysis and production techniques, new major directions for FGMs research are proposed.