Abstract: Isomaltulose is a multifunctional novel sweetener with promising applications in the food industry. Three production methodologies for isomaltulose, including microbial bioconversion, enzymatic transformation, and plant genetic engineering approaches is systematically examined in this review. Special emphasis is placed on its distinctive health-promoting properties, including low glycemic response, slow digestibility, prebiotic effects, reduced cariogenic potential, cognitive enhancement, antioxidative capacity through lipid peroxidation inhibition, and anti-inflammatory activities. Furthermore, the current market landscape of isomaltulose is analyzed, and the major challenges currently faced, including excessively high production technology costs and limitations in industrial-scale development are discussed. A novel approach integrating big data technology with synthetic biology for the development of new isomaltulose production processes is proposed. The serves as a scientific reference for future research endeavors, applications, and commercial exploitation of isomaltulose is provided.