In recent years, metabolic engineering of microorganisms has attained much research interest to produce biofuels and industrially pertinent chemicals. Owing to the relatively fast growth rate, genetic malleability, and carbon neutral production process, cyanobacteria has been recognized as a specialized microorganism with a significant biotechnological perspective. Metabolically engineering cyanobacterial strains have shown great potential for the photosynthetic production of an array of valuable native or non-native chemicals and metabolites with profound agricultural and pharmaceutical significance using CO₂ as a building block. In recent years, substantial improvements in developing and introducing novel and efficient genetic tools such as genome-scale modeling, high throughput omics analyses, synthetic/system biology tools, metabolic flux analysis and clustered regularly interspaced short palindromic repeats (CRISPR)-associated nuclease (CRISPR/cas) systems have been made for engineering cyanobacterial strains. Use of these tools and technologies has led to a greater understanding of the host metabolism, as well as endogenous and heterologous carbon regulation mechanisms which consequently results in the expansion of maximum productive ability and biochemical diversity. This review summarizes recent advances in engineering cyanobacteria to produce biofuel and industrially relevant fine chemicals of high interest. Moreover, the development and applications of cutting-edge toolboxes such as the CRISPR-cas9 system, synthetic biology, high-throughput “omics”, and metabolic flux analysis to engineer cyanobacteria for large-scale cultivation are also discussed.