Currently, the supply of diminishing fossil fuel reserves, and the rise in challenges in environmental, political and economic consequences have caused the great concerns in the development of modern society; these have forced the policy-makers and researchers to look for the renewable and green energy sources. Deemed as a promising renewable alternative to traditional fossil fuels, 2,5-dimethylfuran (DMF, chemical formula C6H8O)—a derivative of furan—has the potential to relieve the growing shortage of fossil fuels while satisfying the increase in global energy demand and minimizing the adverse effects of climate change. DMF can be used as a clean source of liquid transportation biofuel given the fact that it is directly obtained from biomass-derived carbohydrates. In reviewing current DMF production methods, this review paper analyzes and presents the comparison of catalytic performance in the conversion of biomass into DMF. In addition, the applicability of DMF in spark-ignition (SI) engines is thoroughly analyzed based on the spray and flame, combustion, performance, and emission characteristics of SI engines running on DMF compared with ethanol and gasoline. More interestingly, the knocking, lubrication, and wear characteristics in SI engines fueled with DMF are also evaluated and discussed. Nonetheless, further investigation on optimization strategies on DMF production process should be conducted prior to the initiation of large-scale commercialization as well as the application of DMF to real-world SI engines.