Activated sludge is one of the most widely implemented technologies for municipal wastewater treatment. Yet, more restrictive environmental standards demand for more efficient technologies. Aerobic granular sludge (AGS) is a promising alternative in this context since this technology has shown potential for simultaneous organic matter and nutrient removal using smaller bioreactors and consuming less energy. However, despite such engaging claims, only ca. 40 full-scale AGS systems have been installed worldwide after 30 years of development. This reduced implementation suggests the existence of significant bottlenecks for this technology, which currently only have partially been overcome. This overview aims to analyze the recent progress in R&D concerning aerobic sludge granulation for municipal wastewater treatment via the analysis of research articles and invention patents as well as to elucidate exiting technological gaps and development opportunities. Culturing methods aiming at fast granulation, long-term stability and excellent process performance are of utmost interest for promoting massive implementation of full-scale AGS systems. Moreover, the recovery of biomaterials from waste sludge could contribute to the implementation of the biorefinery paradigm in wastewater treatment plants.