Today we are witnessing a global energy crisis due to huge energy demands and limited resources. Non-renewable energy sources are depleting and renewable energy sources are not properly utilized. There is an immediate need for search of alternate routes for energy generation. Microbial fuel cell (MFC) technology, which uses microorganisms to transform chemical energy of organic compounds into electricity is considered a promising alternative. Extensive studies have corroborated new insights into MFC, which show that a wide array of carbon sources including wastes can be employed using a variety of microbes. Consequently, microbial transformation of wastes using novel bioremediation strategies such as MFC for energy generation is considered as an efficient and environmentally benign approach. This paper deals with critical review of different classes of xenobiotics and wastes that can be employed for bioenergy generation, microorganisms involved, power output, major benefits, challenges and pit holes of MFC technology.