Diatoms are among the most diverse and ecologically significant groups of photosynthetic microalgae, contributing over 20% of global primary productivity. Their ecological significance, unique biology, and genetic tractability make them ideal targets for genetic and genomic engineering and metabolic reprogramming. Over the past few decades, numerous genetic methods have been developed and applied to these organisms to better understand the function of individual genes and how they underpin diatom metabolism. Additionally, the ability of diatoms to synthesize diverse high-value metabolites and elaborate mineral structures offers significant potential for applications in biotechnology, including the synthesis of novel pharmaceuticals, nutraceuticals, and biomaterials. This review discusses the latest developments in diatom genetic engineering and provides prospects not only to promote the use of diatoms in diverse fields of biotechnology but also to deepen our understanding of their role in natural ecosystems.