Transfer RNA-derived fragments (tRFs) have become a significant category of small non-coding RNAs that likely play vital roles in various cellular functions. Initially, research on small RNAs overlooked tRFs as simple byproducts of tRNA degradation, but recent findings show they are precisely produced molecules that regulate gene expression. Studies have demonstrated that tRFs regulate genes and proteins through various mechanisms, from miRNA-like targeting that relies on Argonaute (AGO) protein to lesser-known modes of action. Recent reports also suggest that tRFs are involved in multiple diseases, including cancer, where they may be utilized as biomarkers. Notably, tRFs can be transported between different cells and tissues of an organism or even across different organisms, further emphasizing their biological significance. Although evidence increasingly indicates that tRFs may function as new regulatory agents in health and disease, their biogenesis and underlying mechanisms are not yet fully understood. Conducting a thorough exploratory analysis of the tRF modes of action could be a valuable resource for advancing this growing field. Our goal in this review is to gather and examine the latest research on tRF biology, focusing on its diverse and dynamic molecular mechanisms discovered in different disease contexts, with a view toward potential applications in medicine. We aim to gain a deeper understanding of tRFs and explore their potential for new therapeutic breakthroughs by combining insights from molecular studies, disease models, and clinical research.