Microalgae have emerged as promising hosts for product development due to their ease of cultivation and minimal nutritional requirements. Among these, diatoms are unicellular algae belonging to the class Bacillariophyceae. They stand out due to their unique nanoporous silica cell walls (frustules), ecological versatility, and capacity for high-value compound synthesis. Diatoms contribute significantly to global oxygen production and serve as ecological indicators, supporting environmental monitoring, paleolimnology, and forensic science research. Due to their inherent synthesis of polyunsaturated fatty acids, carotenoids, sterols, and terpenoids, as well as their capacity to produce bio-silica nanostructures, these organisms are considered highly suitable for applications in drug delivery, biosensing, biofuel development, and recombinant protein production. This chapter presents an overview of recent advances in using diatoms as both living (hosts) and nonliving (ghosts) systems. It highlights the availability of genomic, transcriptomic, and proteomic resources for model species such as Phaeodactylum tricornutum and Thalassiosira pseudonana, and gaps in omics data for many other diatom taxa. It examines challenges in genome editing tools like CRISPR-Cas9 and TALENs, gene delivery methods, and the transformation vectors and promoter systems. This chapter further explores applications of genetically engineered frustules in biomedical scaffolding, environmental monitoring, biofuel production, nanotechnological applications, targeted drug delivery, cancer therapy, biodegradation, and biosensing. Also, it explains about the challenges and future perspectives of gene editing, and materials engineering places diatoms at the forefront of algal biotechnology. Their dual role as both living factories and structurally unique organisms opens transformative avenues for sustainable innovation across health, energy, and environmental sectors.