The progress of membrane technology with the development of membranes with controlled parameters led to porous membranes. These membranes can be formed using different methods and have numerous applications in science and technology. Anodization of aluminum in this aspect is an electro-synthetic process that changes the surface of the metal through oxidation to deliver an anodic oxide layer. This process results in a self-coordinated, exceptional cluster of round and hollow formed pores with controllable pore widths, periodicity, and thickness. Categorization in barrier type and porous type films, and different methods for the preparation of membranes, have been discussed. After the initial introduction, the paper proceeds with a brief overview of anodizing process. That engages anodic aluminum oxide (AAO) layers to be used as formats in various nanotechnology applications without the necessity for expensive lithographical systems. This review article surveys the current status of the investigation on AAO membranes. A comprehensive analysis is performed on AAO membranes in applications; filtration, sensors, drug delivery, template-assisted growth of various nanostructures. Their multiple usages in nanotechnology have also been discussed to gather nanomaterials and devices or unite them into specific applications, such as nano-electronic gadgets, channel layers, and clinical platforms tissue designing. From this review, the fact that the specified enhancement of properties of AAO can be done by varying geometric parameters of AAO has been highlighted. No review paper focused on a detailed discussion of multiple applications of AAO with prospects and challenges. Also, it is a challenge for the research community to compare results reported in the literature. This paper provides tables for easy comparison of reported applications with membrane parameters. This review paper represents the formation, properties, applications with objective consideration of the prospects and challenges of AAO applications. The prospects may appeal to researchers to promote the development of unique membranes with functionalization and controlled geometric parameters and check the feasibility of the AAO membranes in nanotechnology and devices.