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Nowadays, the valorization of organic wastes using various carbon-capturing technologies is a prime research area. The anaerobic digestion (AD) technology is gaining much consideration in this regard that simultaneously deals with waste valorization and bioenergy production sustainably. Biochar, a well-recognized carbonaceous pyrogenic material and possessing a broad range of inherent physical and chemical properties, has diverse applications in the fields of agriculture, health-care, sensing, catalysis, carbon capture, the environment and energy. The nano-biochar-amended anaerobic digestion approach has intensively been explored for the past few years. However, an inclusive study of multi-functional roles of biochar and the mechanism involved for enhancing the biogas production via the AD process still need to be evaluated. The present review inspects the significant role of biochar addition and the kinetics involved, further focusing on the limitations, perspectives, and challenges of the technology. Additionally, the techno-economic analysis and life-cycle assessment of biochar-aided AD process for the closed-loop integration of biochar and AD and possible improvement practices are discussed.