There exist many experimental indications that final-state interactions (FSIs) may play a prominent role not only in charmful B decays but also in charmless B ones. We examine the final-state rescattering effects on the hadronic B decay rates and their impact on direct CP violation. The color-suppressed neutral modes such as B 0 → D 0 π 0 , π 0 π 0 , ρ 0 π 0 , K 0 π 0 can be substantially enhanced by long-distance rescattering effects. The direct CP -violating partial rate asymmetries in charmless B decays to ππ/πK and ρπ are significantly affected by final-state rescattering and their signs are generally different from that predicted by the short-distance approach. For example, direct CP asymmetry in B 0 → ρ 0 π 0 is increased to around 60% due to final state rescattering effects whereas the short-distance picture gives about 1%. Evidence of direct CP violation in the decay B 0 → K − π + is now established, while the combined BaBar and Belle measurements of B 0 → ρ ± π ∓ imply a 3.6σ direct CP asymmetry in the ρ + π − mode. Our predictions for CP violation agree with experiment in both magnitude and sign, whereas the QCD factorization predictions (especially for ρ + π − ) seem to have some difficulty with the data. Direct CP violation in the decay B − → π − π 0 is very small ( < ∼ 1%) in the Standard Model even after the inclusion of FSIs. Its measurement will provide a nice way to search for New Physics as in the Standard Model QCD penguins cannot contribute (except by isospin violation). Current data on πK modes seem to violate the isospin sum rule relation, suggesting the presence of electroweak penguin contributions. We have also investigated whether a large transverse polarization in B → φK * can arise from the final-state rescattering of D ( * )D ( * ) s into φK * . While the longitudinal polarization fraction can be reduced significantly from short-distance predictions due to such FSI effects, no sizable perpendicular polarization is found owing mainly to the large cancellations occurring in the processes B → D * sD → φK * and B → D sD * → φK * and this can be understood as a consequence of CP and SU(3) [CPS] symmetry. To fully account for the polarization anomaly (especially the perpendicular polarization) observed in B → φK * , FSI from other states or other mechanism, e.g. the penguin-induced annihilation, may have to be invoked. Our conclusion is that the small value of the longitudinal polarization in V V modes cannot be regarded as a clean signal for New Physics.