Oil degumming process involves the removal of gums, which is required to improve the physicochemical and storage properties of the vegetable oils. Degumming of oils can be carried out by using chemicals, membranes (polymeric, inorganic, and ceramic), or enzymes, for example, phospholipases. Phospholipases are enzymes of tremendous significance in the degumming process as they convert gums to fatty acids and lipophilic substances. They provide a cost-effective and safe alternative to other degumming processes without affecting the oil yield. Lysophospholipases (LPLs) are highly valuable tools for degumming vegetable oils. LPLs can hydrolyze fatty acyl ester bonds of phosphatidylcholine at the sn-1 and sn-2 positions of glycerol moiety. In addition, they have the ability to catalyze hydrolysis lysophospholipids' ester bond either at sn-1 or sn-2 position. In this review, biotechnological production and biochemical characteristics of LPLs from three domains of life are highlighted. In comparison to bacterial and eukaryotic LPLs, archaeal LPLs were found to be active at high temperatures. Broad substrate specificity and thermostability of archaeal LPLs make them ideal candidates for the industrial degumming of oils. However, improvement of activity and substrate specificity of archaeal LPLs is required for enhancing their industrial utility. In the current review, various protein-engineering approaches (directed evolution, rational design, site-saturation mutagenesis, and fusion technology) as well as in silico tools have been discussed to increase the commercial significance of LPLs.