Damping-off disease in chili (Capsicum annum L.) cultivation is a significant global issue, severely affecting seeds, seedlings, and young plants, regardless of the location of cultivation, whether in greenhouses or open fields. Despite chili being a widely popular vegetable used in various cuisines globally, farmers face challenges in meeting the growing demand due to the extensive damage caused by this disease, ranging from 20 to 85%. The shelf life and quality of mature pods are also severely affected. Damping-off disease is mainly caused by soil-borne fungus from the Pythium species, with additional contributions from Phytophthora, Fusarium, and Rhizoctonia species. These pathogens’ adaptability to diverse environmental conditions and resistance to synthetic fungicides make controlling damping-off on a commercial scale challenging. However, integrated disease management has shown promising results as a remedial approach. In this review, we discuss the current state of chili diseases, the nature of the pathogens causing damping-off, the epidemiology of the disease, and various control mechanisms. In this review, we broadly discuss the current state of chili diseases, the nature of the pathogens causing damping-off, the epidemiology of the disease, and various control mechanisms. Furthermore, we highlight the importance and efficacy of integrated disease management techniques, along with future prospects in unexplored areas, such as host–pathogen interaction and sustainable disease control measures. The information in this review aims to assist chili growers in understanding the epidemiology and management of damping-off in chili cultivation.