Alum sludge (AlS) refers to the inevitable by-product generated during the drinking water purification process, where Al-salt is used as a coagulant in the water industry. It has long been treated as “waste”, while landfill is its major final disposal destination. In fact, AlS is an underutilized material with huge potential for beneficial reuse as a raw material in various wastewater treatment processes. In the last two decades, intensive studies have been conducted worldwide to explore the “science” and practical application of AlS. This paper focuses on the recent developments in the use of AlS that show its strong potential for reuse in wastewater treatment processes. In particular, the review covers the key “science” of the nature and mechanisms of AlS, revealing why AlS has the potential to be a value-added material. In addition, the future focus of research towards the widespread application of AlS as a raw material/product in commercial markets is suggested, which expands the scope for AlS research and development.