Water pollution and the growing demand for zero liquid discharge solutions have driven the development of advanced wastewater treatment technologies. Membrane distillation (MD) is a promising thermal-based process capable of treating high-salinity brines and wastewater. This review provides an in-depth analysis of MD configurations, operating principles, and membrane characteristics while addressing key challenges such as fouling and pore wetting which hinder large-scale implementation. To overcome these limitations, various membrane fabrication and modification strategies, including physical and chemical approaches, have been explored. The integration of MD with other processes (hybrid MD) for wastewater treatment is also examined. A comprehensive discussion on the mechanisms of organic, inorganic, and biological fouling and their impact on MD performance is presented. Additionally, recent advancements in antifouling strategies, including surface modifications, novel materials, and operational optimizations, are reviewed. Furthermore, the review critically analyzes membrane wetting, its governing mechanisms, and mitigation techniques. By summarizing the current challenges and future prospects, this work provides valuable insights into improving MD performance for practical applications. The findings serve as a foundation for further research and technological advancements in the field of wastewater treatment using MD.