The organic and inorganic pollutants in water stream are due to the various industrial activities, consequent to the higher level environmental contamination. Considering the high toxicity and persistent property of wastewater pollutants, sequestration before discharge into water bodies becomes an important obligation. The conventional treatment methods are mostly associated with the drawbacks of energy intensive conditions and require high investment. Biochar produced through thermal decomposition of lignocellulosic biomass in the limited oxygen conditions offer as the sustainable potential adsorbent towards wastewater pollutants removal. The current review discusses on the utilization of various lignocellulosic biomass precursor for the production of biochar. The significant parameter influence and mechanistic aspects of the biochar production using pyrolysis were critically analyzed. The recent research on biochar modifications through different physical and chemical methods to enhance biochar adsorption property was reported. The new trend of the potential application of biochar in the adsorption of heavy metals, dyes and the underlying mechanisms are comprehensively reviewed. Further explorations are required in the directions of sustainable biochar development, continuous adsorption process, industry scale applications and spent biochar management.