The activated sludge (AS) process has been the most widely used process for wastewater treatment despite it has several limitations for its further application and adoption worldwide, owing to unsustainable properties such as high-energy consumption and the production of large amount of excess sludge. To overcome the drawbacks of the AS process, the downflow hanging sponge (DHS) has been developed as an energy-saving and easy-to-maintain alternative. To date, six types of different sponge configurations have been developed and their performances have been evaluated in practical- to full-scale DHS reactors. A large number of studies have been carried out in order to enhance the performance and expand the application fields of the DHS. Transition of this process to the deployment and diffusion stage from the research and development phase is now ongoing in India and Egypt as well as in Japan. Under this situation, concise and state-of-the art review is important for enhancing DHS research and future applications. Herein, we summarize and present the DHS concerning the history of development, the mechanism of treatment, recent studies on its use in the field of wastewater treatment, and the features of microbial community structure.