Industrial evolution and agricultural expansion, explained by continuing population growth, have rendered enormous problems for the world throughout the past few decades, primarily because of waste generation. To reduce environmental impact and dependence on fossil fuels, scientists have explored replacing synthetic polymers with environmentally friendly and sustainable alternatives in many emergent applications. In this regard, microbial biopolymers have gained special attention. Many biopolymers originating from various strains of bacteria, fungi, and algae have been reported and their possible applications have increased rapidly. This review focuses on the wide range of microbial biopolymers, their characteristics, and factors influencing their production. The present study also describes the environmental applications of microbial biopolymers. The use of these biopolymers is very attractive as a value-added and sustainable approach to wastewater treatment. By acting as adsorbents, coagulants, and flocculants as well as filters in membrane processes, microbial biopolymers shine as promising solutions beyond conventional methods. They can be integrated into various stages of the treatment process, further enhancing the efficiency of wastewater treatment methods. Microbial biopolymer applications in bioremediation and soil stabilization are also reviewed. Several studies have demonstrated the strong potential of biopolymers in soil improvement due to their ability to minimize permeability, eliminate heavy metals, stabilize soil, and limit erosion. Challenges related to scaling up and the downstream processing of microbial biopolymers, as well as its future perspectives in environmental applications, are also discussed.