Seaweeds are microalgae growing in coastal regions and resistant to salinity. Seaweeds are rich resources of natural nutrients some of which cannot be obtained from terrestrial plants. Bioactive compounds of seaweeds such as sulphated polysaccharides, peptides, minerals, phlorotannins, carotenoids and sulfolipids have proven health benefits against various diseases. Traditionally, seaweeds are used as folk medicine for treating diseases like goiter, wounds, burns, rashes, inflammation, diabetes and also gaining attention of pharmaceutical industries due to their anti-cancer, anti-aging, anti-angiogenesis, anti-bacterial, anti-viral and antioxidant properties. Seaweeds polysaccharides have wide applications in foods as well as in pharmaceutical industry due to their bio-chemical properties such as stabilizer, emulsifier and gelling property. In food industry, seaweed polysaccharides are used as a functional ingredient in many products such as frozen foods, ice-cream, jam, jelly, beverages etc. Several commercial food preparations from seaweeds are also available in the market such as sea salt, nori snack wasabi, pink rock salt, seaweed thins toasted coconuts, crunchy seaweed chips, raw unroasted seaweed under different brand names. The present review is a compilation of nutritional, pharmacological and food properties of seaweeds along with its potential towards development of functional foods.