Membrane bioreactor (MBR) has been deemed to be a promising technology for wastewater treatment and reclamation; however, the MBR filtration performance inevitably decreases with filtration time attributed to the deposition of soluble and particulate materials onto and into the membrane under the interactions between activated sludge components and the membrane. Cake layer formation on membrane surfaces has been a major challenge in the operation of MBRs under supra-critical flux operation, and/or caused by uneven distribution of aeration intensities, etc.; however, it was argued that a thin cake layer might improve filtration operation by some researchers. This paper provides a critical review on the formation mechanisms, properties, the role of sludge cake in membrane filtration, and the corresponding strategies of controlling cake fouling in MBRs. Drawbacks and benefits of the formation of sludge cake were also discussed in order to better understand the characteristics and role of sludge cake formation in MBRs.