Abstract Anode‐free lithium batteries have attracted a lot of attention due to several appealing attributes such as high energy density, low cost, and enhanced safety. However, these batteries tend to have relatively short cycle life and rapid capacity decay because of the loss of active lithium from continuous side reactions. In this review, a comprehensive summary of anode‐free lithium batteries developed in both liquid and solid‐state electrolyte systems, the technical challenges that plague their practical applications, as well as corresponding optimization strategies are provided. Special attention is paid to the mechanistic understanding of lithium deposition, stripping, corrosion, and dissolution behaviors. In addition, advanced characterization tools are highlighted to better understand the failure mechanisms of anode‐free lithium batteries. Lastly, both the challenges and opportunities of current anode‐free battery design are concluded and multiple possibilities available for high‐performance anode‐free lithium batteries in the future are provided.