Functional oligosaccharides are non-digestible food ingredients that confer numerous health benefits. Among these, mannooligosaccharides (MOS) are emerging prebiotics that have characteristic potential bio-active properties. Microbial mannanases can be used to break down mannan rich agro-residues to yield MOS. Various applications of MOS as health promoting functional food ingredient may open up newer opportunities in food and feed industry. Enzymatic hydrolysis is the widely preferred method over chemical hydrolysis for MOS production. Presently, commercial MOS is being derived from yeast cell wall mannan and is widely used as prebiotic in feed supplements for poultry and aquaculture. Apart from stimulating the growth of probiotic microflora, MOS impart anticancer and immunomodulatory effects by inducing different gene markers in colon cells. This review summarizes recent developments and future prospects of enzymatic synthesis of MOS from various mannans, their structural characteristics and their potential health benefits.