Commercial and environmental benefits have made carbon dioxide (CO2) methanation one of the topmost research projects all over the world both at the pilot plant and commercial scale. Mitigation of CO, via carbon capture and storage (CCS) routes have less motivation from a commercial point of view. Therefore, an integrated system is of paramount importance to convert CO, into value-added products such as methane (CH4) using solar energy (photosynthesis) or surplus electrical energy in hydrolysis for production of reactant hydrogen to use in CO, methanation. To date, great efforts have been made to investigate both the reaction mechanism and catalysts development for methanation. Here in this review, up to date references have been cited, which are aimed at giving researchers a comprehensive overview of CO, methanation with respect to the recent advancements in reaction mechanism, catalytic materials, and the novel combination of metal active phase and its synergy. Both thermochemical and electrochemical routes of CO, methanation have been discussed, mainly focusing on thermochemical routes. Among the two routes, the thermochemical route seems to be a promising technique for producing an energy carrier due to the high selectivity of CH4.