Abstract: Driven by the global trend toward sugar reduction and developments in the health industry, rare sugars have emerged as a research focus for novel functional products due to their unique properties, such as low caloric value and metabolic regulation effects. This review systematically summarizes recent progress in the preparation pathways, functional properties, and industrial applications of rare sugars. It outlines chemical synthesis routes and highlights recent breakthroughs in biosynthesis strategies, particularly in vitro enzymatic methods and whole-cell microbial cell factories. Furthermore, it reviews the key functional properties of representative rare sugars, particularly D-allulose, and their versatile applications in the food, pharmaceutical, and cosmetic industries. The primary challenge for industrialization remains balancing production costs and synthesis efficiency. Future research should integrate synthetic biology with process optimization to improve production efficiency and deepen mechanistic understanding, thereby promoting the large-scale application of rare sugars in the health industry.