<p>Microbial pigments, which are made from bacteria, fungi, and algae, are becoming more and more popular in the functional food industry due to their vibrant colour and several health advantages. In addition to enhancing the nutritional value and visual appeal of food, these pigments include antibacterial, anti-inflammatory, and antioxidant properties that, when consumed, support increased immune function and gut health. In addition to improving the food’s appearance and visual appeal, using these microbial pigments would also increase its nutritional value. Their poor stability and limited water solubility present a significant challenge to the use of microbial pigments in the food sector. The varieties of pigments, their production methods, health benefits, and particular techniques like biotechnology and nanotechnology that can be used to stabilize pigments like carotenoids, anthocyanins, and betalains derived from different microorganisms are focused under present review. The pigments production mathematical models were explored to standardize its yield. Furthermore, the application of microbial pigments in the functional food and nutraceutical industries aligns with the growing demand for natural food colour alternatives. These pigments hold significant potential for the functional food sector and contribute to the promotion of public health.</p>