Emotion recognition from text and speech has become a critical area of research in artificial intelligence (AI), enhancing human-computer interaction across various sectors. This paper explores the methodologies used in emotion recognition, focusing on Natural Language Processing (NLP) for text and acoustic analysis for speech. It reviews key machine learning and deep learning models, including Support Vector Machines (SVM), neural networks, and transformers, and highlights the datasets commonly used in emotion detection studies. The paper also addresses challenges such as multimodal integration, data ambiguity, and ethical considerations like privacy concerns and bias in models. Applications in customer service, healthcare, education, and entertainment are discussed, showcasing the growing importance of emotion recognition in AI- driven systems. Future research directions, including advancements in deep learning, multimodal systems, and real-time processing, are also explored to address existing limitations.