<p>The conversion of CO₂ into dimethyl ether (DME) has gained significant attention due to its potential as a clean and sustainable alternative fuel. This article provides a comprehensive overview of recent advances in the catalytic conversion of CO₂ to DME, emphasizing the two-step reaction mechanism: the hydrogenation of CO₂ to methanol followed by the dehydration of methanol to DME. The challenges inherent in this process, including thermodynamic constraints and the need for highly selective catalysts, are critically examined, with particular focus on the development of bifunctional catalysts that integrate metal and acid sites. Furthermore, this article explores emerging trends in catalyst design, such as capsule catalysts, and hybrid catalysts, which aim to enhance catalytic efficiency, selectivity, and stability. Additionally, advancements in reactor design and process optimization, including integrated reactor configurations and in situ water removal systems, are discussed in the context of improving the scalability and economic viability of CO₂-to-DME conversion. Finally, the economic and environmental implications of CO₂-to-DME systems are assessed through life cycle analysis (LCA) and techno-economic evaluations, offering insights into the feasibility of commercial-scale implementation. The article concludes by identifying key research gaps and future opportunities, underlining the transformative potential of DME in global decarbonization efforts and the transition to a sustainable, low-carbon economy.</p>