Microbial enzymes have an indispensable role in producing foods, pharmaceuticals, and other commercial goods. Many novel enzymes have been reported from all domains of life, such as plants, microbes, and animals. Nonetheless, industrially desirable enzymes of microbial origin are limited. This review article discusses the classifications, applications, sources, and challenges of most demanded industrial enzymes such as pectinases, cellulase, lipase, and protease. In addition, the production of novel enzymes through protein engineering technologies such as directed evolution, rational, and de novo design, for the improvement of existing industrial enzymes is also explored. We have also explored the role of metagenomics, nanotechnology, OMICs, and machine learning approaches in the bioprospecting of novel enzymes. Overall, this review covers the basics of biocatalysts in industrial and healthcare applications and provides an overview of existing microbial enzyme optimization tools. KEY POINTS: • Microbial bioactive molecules are vital for therapeutic and industrial applications. • High-throughput OMIC is the most proficient approach for novel enzyme discovery. • Comprehensive databases and efficient machine learning models are the need of the hour to fast forward de novo enzyme design and discovery.