Abstract: During fish processing, a large number of by-products (Such as viscera, fish heads, and fish bones) are produced. These by-products are usually discarded directly, resulting in great waste. These by-products are rich in fish oil components with unique bioactivities, providing an effective approach for their value-added utilization. This paper summarizes the research progress of fish oil extraction, purification, modification technologies, and its functional activities, so as to boost resource utilization efficiency and obtain high-quality fish oil. Conventional extraction methods are inefficient, involving solvent residues, or are high costs. In contrast, emerging techniques such as microwave-assisted extraction (MAE), ultrasonic-assisted extraction (UAE), and supercritical fluid extraction (SFE) show great potential due to their high efficiency, environmental friendliness, and low solvent consumption. In the aspects of separation and purification, in addition to traditional methods, enzyme enrichment, supercritical separation, chromatography, and membrane separation technologies have become research hotspots. However, they also face challenges such as high costs, difficulties in scaling up, and membrane fouling. Modification technologies such as emulsification, microencapsulation, enzyme-assisted modification, and addition of antioxidants can improve the physicochemical properties of fish oil and expand its applications. Fish oil is rich in polyunsaturated fatty acids (PUFA) and has various physiological functions, such as anti-inflammatory effects, regulation of blood glucose and lipid metabolism, prevention of cardiovascular diseases, antioxidant, anti-aging, and anti-tumor activities. Its applications provide new ideas for the fields of medical care, health products, and nutritional foods, promoting the efficient utilization and sustainable development of fishery by-products.