The membrane-biofilm reactor (MBfR), sometimes known as the membrane-aerated biofilm reactor (MABR), is an emerging treatment technology based on gas-transferring membranes. The membranes typically supply a gaseous electron donor or acceptor substrate, such as oxygen, hydrogen, and methane. The substrate diffuses through the membrane to a biofilm naturally forming on the membrane outer surface. The complementary substrate (electron donor or acceptor) typically diffuses from the bulk liquid into the biofilm, making MBfR counter diffusional. This paper reviews the unique behavior of counter-diffusional biofilms and highlights recent research on the MBfR. Key advances include insights into the microbial community structure of MBfRs, applying the MBfR to novel contaminants, providing a better understanding of biofilm morphology and its effects on MBfR behavior, and the development of methane-based MBfR applications. These advances are likely to further the development of the MBfR for environmental applications, such as energy-efficient wastewater treatment and advanced water treatment.