Photodynamic therapy (PDT) is a medical treatment that utilizes photosensitizing agents, along with light, to produce reactive oxygen species that can kill nearby cells. When the photosensitizer is exposed to a specific wavelength of light, it becomes activated and generates reactive oxygen that can destroy cancer cells, bacteria, and other pathogenic micro-organisms. PDT is commonly used in dermatology for treating actinic keratosis, basal cell carcinoma, and other skin conditions. It is also being explored for applications in oncology, such as treating esophageal and lung cancers, as well as in ophthalmology for age-related macular degeneration. In this study, we provide a comprehensive review of PDT, covering its fundamental principles and mechanisms, as well as the critical components for its function. We examine key aspects of PDT, including its current clinical applications and potential future developments. Additionally, we discuss the advantages and disadvantages of PDT, addressing the various challenges associated with its implementation and optimization. This review aims to offer a thorough understanding of PDT, highlighting its transformative potential in medical treatments while acknowledging the areas requiring further research and development.