The sugar alcohol erythritol is a relatively new food ingredient. It is naturally occurring in plants, however, produced commercially by fermentation. It is also produced endogenously via the pentose phosphate pathway (PPP). Consumers perceive erythritol as less healthy than sweeteners extracted from plants, including sucrose. This review evaluates that perspective by summarizing current literature regarding erythritol’s safety, production, metabolism, and health effects. Dietary erythritol is 30% less sweet than sucrose, but contains negligible energy. Because it is almost fully absorbed and excreted in urine, it is better tolerated than other sugar alcohols. Evidence shows erythritol has potential as a beneficial replacement for sugar in healthy and diabetic subjects as it exerts no effects on glucose or insulin and induces gut hormone secretions that modulate satiety to promote weight loss. Long-term rodent studies show erythritol consumption lowers body weight or adiposity. However, observational studies indicate positive association between plasma erythritol and obesity and cardiometabolic disease. It is unlikely that dietary erythritol is mediating these associations, rather they reflect dysregulated PPP due to impaired glycemia or glucose-rich diet. However, long-term clinical trials investigating the effects of chronic erythritol consumption on body weight and risk for metabolic diseases are needed. Current evidence suggests these studies will document beneficial effects of dietary erythritol compared to caloric sugars and allay consumer misperceptions.