The shift from centralized to distributed generation and the need to address energy shortage and achieve the sustainability goals are among the important factors that drive increasing interests of governments, planners, and other relevant stakeholders in microgrid systems. Apart from the distributed renewable energy resources, fuel cells (FCs) are a clean, pollution-free, highly efficient, flexible, and promising energy resource for microgrid applications that need more attention in research and development terms. Furthermore, they can offer continuous operation and do not require recharging. This paper examines the exciting potential of FCs and their utilization in microgrid systems. It presents a comprehensive review of FCs, with emphasis on the developmental status of the different technologies, comparison of operational characteristics, and the prevailing techno-economic barriers to their progress and the future outlook. Furthermore, particular attention is paid to the applications of the FC technologies in microgrid systems such as grid-integrated, grid-parallel, stand-alone, backup or emergency power, and direct current systems, including the FC control mechanisms and hybrid designs, and the technical challenges faced when employing FCs in microgrids based on recent developments. Microgrids can help to strengthen the existing power grid and are also suitable for mitigating the problem of energy poverty in remote locations. The paper is expected to provide useful insights into advancing research and developments in clean energy generation through microgrid systems based on FCs.