Biofuels have emerged as a critical pillar in the global transition toward low-carbon energy systems, providing an essential bridge between immediate decarbonization needs and long-term renewable energy strategies. This chapter presents a state-of-the-art overview of biofuel development across first-, second-, third-, and fourth-generation technologies, highlighting their feedstock diversity, conversion pathways, and system integration potential. It emphasizes the techno-economic and environmental trade-offs across biochemical and thermochemical routes, supported by lifecycle assessment (LCA) and sustainability metrics such as carbon intensity, energy return on investment, water–nutrient footprint, and biodiversity indices. Special attention is given to the role of biofuels in hard-to-abate sectors including aviation, heavy industry, rural off-grid power, and hybrid renewable systems. The chapter also synthesizes global and regional policy frameworks, sustainability certification schemes, and market mechanisms that govern large-scale deployment, while addressing challenges of land-use change, feedstock variability, logistics, and price competitiveness. Emerging innovations—ranging from torrefaction, hydrothermal liquefaction, and microbial bioconversion to multi-product biorefineries and bioenergy with carbon capture and storage (BECCS)—are explored as future enablers of net-zero and carbon-negative pathways. By integrating technical, environmental, and governance perspectives, the chapter positions biofuels not merely as fuel substitutes but as transformative enablers of climate change mitigation, rural development, and circular bioeconomy advancement.