Pillow-plate heat exchangers (PPHEs) are increasingly being recognized as innovative and efficient solutions for heat-transfer applications. These exchangers stand out for their unique design, featuring pillow-shaped channels that enhance the thermal performance, ensure effective heat transfer, and minimize material usage. Their compact size and structural durability make them ideal for applications across various industries such as food processing, pharmaceuticals, energy systems, Heating, Ventilation, and Air Conditioning (HVAC), chemical processing, and renewable energy systems. PPHEs also address the growing demand for environmentally sustainable technologies, making them viable alternatives to traditional heat exchangers, such as shell-and-tube designs. In recent years, PPHEs have gained attention owing to their ability to improve energy efficiency and reduce operational costs. However, the widespread adoption of PPHEs is still limited by challenges, such as complex manufacturing processes, intricate geometries, and a lack of comprehensive design tools and performance data. This review provides an in-depth analysis of the advancements in PPHE technology, focusing on heat transfer mechanisms, thermohydraulic performance, flow configuration, and material selection. It also highlights their potential for diverse industrial applications and compares their performance with that of traditional designs. This review identifies key research gaps, including the need for advanced computational models, two-phase flow studies, and the optimization of manufacturing techniques.