The present review highlights the recent advancements regarding the use of biochar for the management of nutrient impoverished and metal contaminated soils. It includes a detailed discussion on the preparation, applications, and prospects of biochar for sustainable agriculture and environmental sustainability. Biochar is a sensible and robust material for the enhancement of soil fertility and management of contaminated soils for sustainable agriculture and mitigation of climate change. The properties of biochar are dependent on the type of feedstocks, pyrolysis temperature, residence/retention time, flow rate of gas, and modification characteristics of biochar. The use of biochar can improve the physicochemical and biological properties of soil, which results in enhanced crop growth and productivity under normal conditions, as well as in soils that pose abiotic stresses because of the presence of heavy metals, salt, or organic contaminants. Biochar remains unaltered in the soil for a long time, thereby contributing to soil organic carbon, mitigation of greenhouse gases, and ultimately contributing to the mitigation of climate change. The proposed research guidelines recommend prolonged field trials to assess the ecological impacts of biochar in soil, as well as its production, with the aim of increasing agricultural and environmental sustainability. Furthermore, the related processes can be effectively deliberated for exploiting the overall efficacy of the biochar modifications.