The swift advancement of sustainable energy technologies, coupled with the urgent need to address environmental challenges, has generated considerable interest in the multifaceted applications of biochar materials to promote energy, water, and environmental sustainability. This comprehensive review examines recent advancements in the production and applications of functionalized biochar materials, emphasizing their pivotal roles in energy conversion and storage, wastewater treatment, CO₂ reduction, soil amelioration, and the promotion of carbon neutrality within a circular economy framework. The functionalization of biochar materials involves surface chemistry and porosity modifications, achieved through techniques like templating, chemical activation, metal impregnation, or heteroatom doping. These modifications substantially enhance the catalytic activity, energy storage capacity, and cycling stability of biochar materials, making them particularly effective in diverse energy applications such as water splitting, fuel cells, and supercapacitors. Additionally, functionalized biochar materials demonstrate remarkable efficacy as catalysts and adsorbents in wastewater treatment, proficiently removing pollutants like heavy metals, organic contaminants, and nutrients, thereby facilitating resource recovery from wastewater. The review also underscores the potential of functionalized biochar materials in CO₂ capture and conversion, exploring innovative strategies to augment their CO₂ adsorption capacity and state-of-the-art catalytic processes for transforming captured CO₂ into valuable fuels and chemicals. In summary, this review offers valuable insights into the recent advancements in biochar research, underscoring its substantial commercial potential as a versatile material contributing to a cleaner and more sustainable future.Article Highlights The current status of biochar research is comprehensively reviewed. The potential of biochar in energy, water, and environmental fields is critically examined. Technology readiness levels (TRLs) of various biochar-based technologies are evaluated. Graphical Abstract