Biogas production from waste materials has emerged as a promising avenue for sustainable energy generation, offering a dual benefit of waste management and renewable energy production. The selection and preparation of waste feedstocks, including agricultural residues, food waste, animal manure, and municipal solid wastes, are important for this process, while the microbial communities are majorly responsible for bioconversions. This review explores the role of complex microbial communities and their functions responsible for the anaerobic digestion of wastes. It covers the crucial physiological processes including hydrolysis, acidogenesis, acetogenesis, and methanogenesis, elucidating the microbial activities and metabolic pathways involved in the prospects of improving the efficiency of biogas production. This article further discusses the influence of recent progress in molecular techniques, including genomics, metagenomics, meta-transcriptomics, and stable isotope probing. These advancements have greatly improved our understanding of microbial communities and their capabilities of biogas production from waste materials. The integration of these techniques with process monitoring and control strategies has been elaborated to offer possibilities for optimizing biogas production and ensuring process stability. Microbial additives, co-digestion of diverse feedstocks, and process optimization through microbial community engineering have been discussed as effective approaches to enhance the efficiency of biogas production. This review also outlines the emerging trends and future prospects in microbial-based biogas production, including the utilization of synthetic biology tools for engineering novel microbial strains and consortia, harnessing microbiomes from extreme environments, and integrating biogas production with other biotechnological processes. While there are several reviews regarding the technical aspects of biogas production, this article stands out by offering up-to-date insights and recommendations for leveraging the potential of microbial communities, and their physiological roles for efficient biogas production. These insights emphasize the pivotal role of microbes in enhancing biogas production, ultimately contributing to the advancement of a sustainable and carbon-neutral future.