Dimethyl ether (DME) is a synthetically produced alternative fuel to diesel-based fuel and could be used in ignition diesel engines due to increasing energy demand. DME is considered extremely clean transportation and green fuel because it has a high cetane number (around 60), low boiling point (−25 °C), and high oxygen amount (35 wt%) which allow fast evaporation and higher combustion quality (smoke-free operation and 90% fewer NOx emissions) than other alternative CO2-based fuels. DME can be synthesized from various routes such as coal, petroleum, and bio-based material (i.e., biomass and bio-oil). Dimethyl ether can be produced from CO2 to prevent greenhouse gas emissions. This review aims to summarize recent progress in the field of innovative catalysts for the direct synthesis of dimethyl ether from syngas (CO+H2) and operating conditions. The problems of this process have been raised based on the yield and selectivity of dimethyl ether. However, regardless of how syngas is produced, the estimated total capital and operating costs in the industrial process depend on the type of reactor and the separation method.