Agar is one of the three major colloidal linear polysaccharides obtained from marine seaweeds, specifically red macroalgae (Rhodophyta). It has garnered significant attention owing to its diverse industrial applications, potential for bioethanol production, and the physiological activities of its derived saccharides. This review delves into the preparation and degradation processes of agar, focusing on both physical and chemical pretreatments, as well as subsequent hydrolysis through acid and enzymatic methods. It highlights the bioactivities of agar-derived oligosaccharides and monosaccharides, including their antioxidant, anti-inflammatory, antibacterial, immunomodulatory, hypolipidemic effects, as well as their ability to suppress melanin production. Additionally, this review discusses their role in regulating intestinal flora and explores the relationship between the structure of agar-derived saccharides and their applications, emphasizing the impact of the presence of 3,6-anhydro-α-l-galactose at the nonreducing end of the chain on their functionality.