Ferroptosis is a non-apoptotic form of regulated cell death characterized by the lethal accumulation of iron-dependent membrane-localized lipid peroxides. It acts as an innate tumor suppressor mechanism and participates in the biological processes of tumors. Intriguingly, mesenchymal and dedifferentiated cancer cells, which are usually resistant to apoptosis and traditional therapies, are exquisitely vulnerable to ferroptosis, further underscoring its potential as a treatment approach for cancers, especially for refractory cancers. However, the impact of ferroptosis on cancer extends beyond its direct cytotoxic effect on tumor cells. Ferroptosis induction not only inhibits cancer but also promotes cancer development due to its potential negative impact on anticancer immunity. Thus, a comprehensive understanding of the role of ferroptosis in cancer is crucial for the successful translation of ferroptosis therapy from the laboratory to clinical applications. In this review, we provide an overview of the recent advancements in understanding ferroptosis in cancer, covering molecular mechanisms, biological functions, regulatory pathways, and interactions with the tumor microenvironment. We also summarize the potential applications of ferroptosis induction in immunotherapy, radiotherapy, and systemic therapy, as well as ferroptosis inhibition for cancer treatment in various conditions. We finally discuss ferroptosis markers, the current challenges and future directions of ferroptosis in the treatment of cancer.