Plastic pollution is of critical environmental concern, thus biodegradable plastics (BPs) have emerged as a potential solution to limit plastic waste accumulation. However, the fate of BPs in the environment, particularly their degradation and the subsequent generation of biodegradable microplastic (BMP) particles, remains poorly understood. This review aims to provide comprehensive insights into the biodegradation process of BPs and their impacts on soil and freshwater environments. Microorganisms play a pivotal role in this process by dismantling polymer chains into smaller particles. Factors influencing biodegradation rates include polymer composition, environmental conditions (e.g., temperature, ultraviolet radiation (UV), and pH), and the presence of chemical additives. However, incomplete degradation can result in BMPs, potentially perpetuating their presence in the environment and posing risks to ecosystems and organisms. This review consolidates understanding the mechanisms governing biodegradation and BMP formation, which is imperative for evaluating their environmental consequences and devising effective strategies for managing plastic waste.