Carbon‐based materials have played a pivotal role in enhancing the electrochemical performance of Li‐ion batteries (LIBs). This review summarizes the significant developments in the application of carbon‐based materials for enhancing LIBs. It highlights the latest innovations in different types of carbon materials such as graphite, soft carbon, hard carbon, and various carbon nanostructures, including design and synthesis. Additionally, the feasibility of developing flexible self‐supported electrodes for wearable devices is underlined. More emphasis is given to elucidating the Li‐ion storage mechanisms inherent in various carbon materials, illustrating the variations in Li‐storage that arise as the structure transitions from order to disorder and from bulk to the nano realm. Furthermore, the use of carbon composites, which incorporate different alloy/conversion/intercalation type materials with carbon matrices, is discussed in view of their improved electrochemical performances in terms of energy density, power density, and cycling stability. The review underscores the growing importance of carbon materials in addressing the ever‐increasing demand for high‐performance energy storage solutions and also addresses the remaining challenges and future perspectives, aiming to provide future research directions.