Functional sugars have attracted attention because of their wide application prospects in the food, cosmetics, and pharmaceutical industries in recent decades. Compared with complex chemical synthesis, enzymatic methods of creating functional sugars, characterized by high specificity, moderate reaction conditions, and sustainability, are favored. d-lyxose isomerase (d-LI, EC 5.3.1.15), an important aldose-ketose isomerase, catalyzes the reverse isomerization reaction between d-xylulose and d-lyxose, as well as d-fructose and d-mannose. d-LI has drawn researchers' attention due to its broad substrate specificity and high potential for enzymatic production of some functional sugars such as d-xylulose, d-mannose, and d-ribose. In this article, an overview of recent advances in the biochemical properties of various d-LIs is explored in detail. Structural analysis, active site identification, and catalytic mechanisms are also provided. Additionally, the applications of d-LIs for functional sugar production, including d-lyxose, d-mannose, and l-ribose, are reviewed in detail in this paper.