The stringent new regulations to lower sulfur content in fossil fuels require new economic and efficient methods for desulfurization of recalcitrant organic sulfur. Hydrodesulfurization of such compounds is very costly and requires high operating temperature and pressure. Biodesulfurization is a non-invasive approach that can specifically remove sulfur from refractory hydrocarbons under mild conditions and it can be potentially used in industrial desulfurization. Intensive research has been conducted in microbiology and molecular biology of the competent strains to increase their desulfurization activity; however, even the highest activity obtained is still insufficient to fulfill the industrial requirements. To improve the biodesulfurization efficiency, more work is needed in areas such as increasing specific desulfurization activity, hydrocarbon phase tolerance, sulfur removal at higher temperature, and isolating new strains for desulfurizing a broader range of sulfur compounds. This article comprehensively reviews and discusses key issues, advances and challenges for a competitive biodesulfurization process.