This review article summarizes recent seminal research works on optical properties of inorganic pigments. A comprehensive state-of-art on rare earth-transition metal oxide pigments brings out lacuna in the design of colorants based on systematic study of their optical properties, particle sizes and other lattice derived parameters, which can lead to tailor made colorants of high intensity for specific applications. Further, most of the currently used inorganic pigments contain toxic metals that can adversely affect the environment and human health, if critical levels are exceeded. Better color properties by way of reducing the particle size, can also be obtained by adopting low temperature hydrothermal and soft chemical routes apart from the conventional solid solution routes for the preparation of mixed oxide pigments. Thermal/chemical stability, dispersibility, chromaticity, tint strength and masking power are important criteria to be considered in the selection of suitable pigments, especially for surface coating applications.