The aqueous two-phase system (ATPS) is commonly known as a technique that yields high-purity products in a single step. It is particularly advantageous for purifying biomolecules like proteins, nucleic acids, enzymes, viruses etc. Currently, aqueous two-phase extraction (ATPE), i.e., liquid-liquid extraction, involves the transfer of the solute from one aqueous phase to another. In ATPE, for recovery of biomolecules, polymer-polymer and polymersalt type systems are used. The most recent developments with respect to recovery of biomolecules by ATPS are reviewed and discussed, covering the mechanism, which controls the phase formation, the conditions of solute partitioning in ATPS processes, and factors influencing the ATPS including concentration and molecular weight (MW) of polymers, types of salt, pH, and temperature. In addition, also the increasing applications of ATPS for the recovery of high-value bioproducts, the benefits of the ATPS recovery system, and the recent developments of alternative low-cost ATPS are highlighted.