Direct ethanol fuel cells have attracted much attention recently in the search for alternative energy resources. As an emerging technology, direct ethanol fuel cells have many challenges that need to be addressed. Many improvements have been made to increase the performance of direct ethanol fuel cells, and there are great expectations for their potential. However, many improvements need to be made in order to enhance the potential of direct ethanol fuel cells in the future. This paper addresses the challenges and the developments of direct ethanol fuel cells at present. It also presents the applications of DEFC.