Erythritol, a four-carbon polyol, is a biological sweetener with applications in food and pharmaceutical industries. It is also used as a functional sugar substitute in special foods for people with diabetes and obesity because of its unique nutritional properties. Erythritol is produced by microbial methods using mostly osmophilic yeasts and has been produced commercially using mutant strains of Aureobasidium sp. and Pseudozyma tsukubaensis. Due to the high yield and productivity in the industrial scale of production, erythritol serves as an inexpensive starting material for the production of other sugars. This review focuses on the approaches for the efficient erythritol production, strategies used to enhance erythritol productivity in microbes, and the potential biotechnological applications of erythritol.