Smart Grid (SG) is regarded as complex electrical power system due to massive penetration of Renewable Energy Resources and Distribution Generations. The implementation of adjustable speed drives, advance power electronic devices, and electric arc furnaces are incorporated in SG (the transition from conventional power system). Moreover, SG is an advance, automated, controlled, efficient, digital, and intelligent system that ensures pertinent benefits, such as: (a) consumer empowerment, (b) advanced communication infrastructure, (c) user-friendly system, and (d) supports bi-directional power flow. Digital Signal Processing (DSP) is key tool for SG deployment and provides key solutions to a vast array of complex SG challenges. This research provides a comprehensive study on DSP interactions within SG. The prominent challenges posed by conventional grid, such as: (a) monitoring and control, (b) Electric Vehicles infrastructure, (c) cyber data injection attack, (d) Demand Response management and (e) cyber data injection attack are thoroughly investigated in this research.