Abstract Phage therapy presents a promising solution for combating multidrug‐resistant (MDR) bacterial infections and other bacteria‐related diseases, attributed to their innate ability to target and lyse bacteria. Recent clinical successes, particularly in treating MDR‐related respiratory and post‐surgical infections, validated the therapeutic potential of phage therapy. However, the complex microenvironment within the human body poses significant challenges to phage activity and efficacy in vivo. To overcome these barriers, recent advances in phage engineering have aimed to enhance targeting accuracy, improve stability and survivability, and explore synergistic combinations with other therapeutic modalities. This review provides a comprehensive overview of phage therapy, emphasizing the application of engineered phages in antibacterial therapy, tumor therapy, and vaccine development. Furthermore, the review highlights the current challenges and future trends for advancing phage therapy toward broader clinical applications.