Cancer stands as the leading global cause of mortality, with rare cancer comprising 230 distinct subtypes characterized by infrequent incidence. Despite the inherent challenges in addressing the diagnosis and treatment of rare cancers due to their low occurrence rates, several biomedical breakthroughs have led to significant advancement in both areas. This review provides a comprehensive overview of state-of-the-art diagnostic techniques that encompass new-generation sequencing and multi-omics, coupled with the integration of artificial intelligence and machine learning, that have revolutionized rare cancer diagnosis. In addition, this review highlights the latest innovations in rare cancer therapeutic options, comprising immunotherapy, targeted therapy, transplantation, and drug combination therapy, that have undergone clinical trials and significantly contribute to the tumor remission and overall survival of rare cancer patients. In this review, we summarize recent breakthroughs and insights in the understanding of rare cancer pathophysiology, diagnosis, and therapeutic modalities, as well as the challenges faced in the development of rare cancer diagnosis data interpretation and drug development.