Biochar is considered as a potential substitute for soil organic matter (SOM). Considering the importance of biochar, the present review is based on the different benefits and potential risks of the application of biochar to the soil. Biochar addition to low organic carbon soils can act as a feasible solution to keep soil biologically active for the cycling of different nutrients. The application of biochar could improve soil fertility, increase crop yield, enhance plant growth and microbial abundance, and immobilize different contaminants in the soil. It could also be helpful in carbon sequestration and the return of carbon stock back to the soil in partially combusted form. Due to the large surface area of biochar, which generally depends upon the types of feedstock and pyrolysis conditions, it helps to reduce the leaching of fertilizers from the soil and supplies additional nutrients to growing crops. However, biochar may have some adverse effects due to emissions during the pyrolysis process, but it exerts a positive priming effect (a phenomenon in which subjection to one stimulus positively influences subsequent stimulus) on SOM decomposition, depletion of nutrients (macro- and micro-) via strong adsorption, and impact on soil physicochemical properties. In view of the above importance and limitations, all possible issues related to biochar application should be considered. The review presents extensive detailed information on the sustainable approach for the environmental use of biochar and its limitations.