This state-of-the-art review is designed to provide a factual analysis of indoor air pollution in Pakistan. Primarily, the main sources of indoor air pollution and related air pollutants were analyzed. Key sources of indoor air pollution include household energy sources (biomass, wood, coal, tobacco, and low temperatures) producing particulate matter (PM), dust particles, smoke, COx, noxious gases, bioaerosols, airborne microflora, and flame retardants. According to the literature, rural regions of Pakistan using biomass indoor fuels have a high indoor PM concentration in the range of 4000–9000 μg/m3. In rural/urban regions, indoor smoking also leads to high PM2.5 levels of ~1800 μg/m3, which can cause pulmonary infections. In hospitals, PM concentrations were detected up to 1000 μg/m3, causing repeated infections in patients. Indoor ingestion of dust containing polychlorinated biphenyl concentrations was observed at high levels (~8.79–34.39 ng/g) in cities; this can cause serious health effects such as cancer risks and a loss of working productivity. Moreover, indoor microflora and bacteria (~10,000–15,000 cfu m−3) in urban/rural regions cause respiratory/cancer risks. In this context, indoor air quality (IAQ) monitoring and management strategies have been somewhat developed; however, their implementation in Pakistan’s rural/urban indoor environments is still needed. Various challenges were identified for monitoring/regulating IAQ. There is a firm need for industry–academia–research cooperation and for the involvement of government/agencies to support indoor air pollution control/management and for intervention strategies.