Isomaltolose, also known as palatinose, is a reductive disaccharide formed by the α-1,6 glycosidic linkage of one glucose molecule and one fructose molecule. Isomalt (palatinit) can be obtained by hydrogenating and reducing isomaltulose and is an emerging functional edible sugar alcohol. Isomalt consists of two stereoisomers, α-D-pyranose glucose-(1,6)-D-sorbitol (GPS), and α-D-pyranose glucose-(1,1)-D-mannitol dihydrate (GPM), forming a white crystalline mixture. Depending on the ratio of GPS to GPM, isomalt can be classified into four primary products:ISOMALT ST, ISOMALT GS, ISOMALT DC, and ISOMALT LM. Isomalt is the only disaccharide sugar alcohol entirely derived from sucrose, with a taste profile resembling sucrose. It exhibits approximately 45% of the sweetness of sucrose and provides 50% of its calorific value. Notably, isomalt offers advantages such as chemical stability, non-cariogenic properties, and minimal impact on blood glucose and insulin levels after consumption, making it a viable and healthy alternative to sucrose. The physiological functions, industrial manufacturing, and current applications of isomalt were reviewed. The production processes (biocatalysis and hydrogenation technology) of isomalt were systematically introduced. The research progress on the key enzyme sucrose isomerase, involved in isomalt biosynthesis, including its structure, catalytic mechanism, and molecular modification were elaborated, providing valuable guidance for further research and industrial-scale production in this field.