Alginate, a group of polyuronic saccharides, has been widely used in both pharmaceutical and food industries due to its unique physicochemical properties as well as beneficial health effects. However, the potential applications of alginate are restricted because of its low water solubility and high solution viscosity when significant concentrations are needed, particularly in food products. Alginate oligosaccharides (AOS), oligomers containing 2 to 25 monomers, can be obtained via hydrolysis of glycosidic bonds, organic synthesis, or through biosynthesis. Generally, AOS have shorter chain lengths and thus improved water solubility when compared with higher molecular weight alginates of the same monomers. These oligosaccharides have attracted interest from both basic and applied researchers. AOS have unique bioactivity and can impart health benefits. They have shown immunomodulatory, antimicrobial, antioxidant, prebiotic, antihypertensive, antidiabetic, antitumor, anticoagulant, and other activities. As examples, they have been utilized as prebiotics, feed supplements for aquaculture, poultry, and swine, elicitors for plants and microorganisms, cryoprotectors for frozen foods, and postharvest treatments. This review comprehensively covers methods for AOS production from alginate, such as physical/chemical methods, enzymatic methods, fermentation, organic synthesis, and biosynthesis. Moreover, current progress in structural characterization, potential health benefits, and AOS metabolism after ingestion are summarized in this review. This review will discuss methods for producing and modified AOS with desirable structures that are suited for novel applications.