Herbal medicines have been used for centuries to treat various ailments and have now gained global importance for their therapeutic and economic implications. One such plant is Averrhoa carambola commonly known as star fruit, a tropical plant belonging to the Oxalidaceae family. With a rich history of traditional medicinal uses in India and Southeast Asia, it has been employed to treat various ailments, including urinary infections, hypertension, diabetes, and gastrointestinal issues. The fruit is popular for its sweet and sour taste and finds culinary use in salads, beverages, and garnishing. The therapeutic potential of A. carambola is attributed to its abundance of natural antioxidants and phenolic compounds such as gallic acid in gallotannin form, catechins, and epicatechins. These bioactive constituents contribute to its medicinal properties and health benefits. However, scientific investigations have revealed potential health risks associated with A. carambola consumption. High oxalic acid content in the fruit poses a risk of toxicity, particularly for individuals with renal impairments who consume excessive fruit juices. Additionally, the presence of caramboxin, a neurotoxin, can interfere with the GABAergic system, leading to neurotoxic effects. This review offers a comprehensive and well-organized examination of the current progress regarding the benefits, phytochemistry, pharmacology, and toxicity of A. carambola. The insights presented in this review have the potential to drive advancements and novel treatments involving star fruit in modern times. As interest in herbal medicines continues to rise, further research on A. carambola holds promise for exploring new therapeutic applications in the realm of natural remedies.