This review critically evaluates recent advances in the application of Azolla species for the phytoremediation of wastewater. Azolla, a free-floating aquatic macrophyte fern, exhibits rapid biomass proliferation and high nutrient uptake capacity, enabling efficient removal of heavy metals, nutrients, and organic contaminants from aqueous systems. Published studies demonstrate that different Azolla species vary in remediation performance depending on wastewater characteristics and environmental conditions. Reported removal efficiencies frequently exceed 90% for heavy metals such as Fe, Cr, and Pb. Furthermore, organic pollutant removal and oxygen demand reduction reach up to 78% for chemical oxygen demand (COD), while nutrient removal efficiencies achieve up to 66% for total nitrogen (TN). In addition to physiological mechanisms, recent progress in genetic engineering, CRISPR-based genome editing, and nanotechnology assisted enhancement strategies has expanded the potential of Azolla for large-scale wastewater treatment applications. This review emphasizes mechanistic understanding, comparative species performance, and hybrid system integration strategies to provide a comprehensive framework for sustainable ecosystem restoration.