<p>Aqueous two-phase systems (ATPS) are widely recognized as a promising and environmentally friendly tool, attracting significant attention from researchers for both engineering applications and environmental science research. Despite this growing interest, a comprehensive understanding of the environmental applications of ATPSs remains limited. This review outlines the fundamental principles and classifications of ATPS, followed by a critical comparison of various system types. Hydrophobic and electrostatic interactions are key driving mechanisms for the separation and extraction of pollutants from real water bodies using ATPS. Through rational selection of phase-forming components and precise control of mixing conditions, ATPS can be tailored to fulfill diverse functional objectives beyond pollutant enrichment, including the recovery of valuable metals, the selective separation of dyes for subsequent reuse, and the preconcentration or targeted removal of organic pollutants. A comparative analysis is also conducted to evaluate the advantages and disadvantages of ATPS relative to common separation techniques such as precipitation, membrane filtration, and chromatographic processes. Challenges and recommendations for applying ATPS in environmental engineering, along with its significant potential and opportunities in research areas, are also discussed. This review aims to offer researchers meaningful insights and practical guidance for the application of ATPS, thereby facilitating its broader adoption in both natural environmental and engineering contexts.</p> Graphical Abstract <p></p>