The worldwide annual production of lobster was 165,367 tons valued over $3.32 billion in 2004, but this figure rose up to 304,000 tons in 2012. Over half the volume of the worldwide lobster production has been processed to meet the rising global demand in diversified lobster products. Lobster processing generates a large amount of by-products (heads, shells, livers, and eggs) which account for 50–70% of the starting material. Continued production of these lobster processing by-products (LPBs) without corresponding process development for efficient utilization has led to disposal issues associated with costs and pollutions. This review presents the promising opportunities to maximize the utilization of LPBs by economic recovery of their valuable components to produce high value-added products. More than 50,000 tons of LPBs are globally generated, which costs lobster processing companies upward of about $7.5 million/year for disposal. This not only presents financial and environmental burdens to the lobster processors but also wastes a valuable bioresource. LPBs are rich in a range of high-value compounds such as proteins, chitin, lipids, minerals, and pigments. Extracts recovered from LPBs have been demonstrated to possess several functionalities and bioactivities, which are useful for numerous applications in water treatment, agriculture, food, nutraceutical, pharmaceutical products, and biomedicine. Although LPBs have been studied for recovery of valuable components, utilization of these materials for the large-scale production is still very limited. Extraction of lobster components using microwave, ultrasonic, and supercritical fluid extraction were found to be promising techniques that could be used for large-scale production. LPBs are rich in high-value compounds that are currently being underutilized. These compounds can be extracted for being used as functional ingredients, nutraceuticals, and pharmaceuticals in a wide range of commercial applications. The efficient utilization of LPBs would not only generate significant economic benefits but also reduce the problems of waste management associated with the lobster industry. This comprehensive review highlights the availability of the global LPBs, the key components in LPBs and their current applications, the limitations to the extraction techniques used, and the suggested emerging techniques which may be promising on an industrial scale for the maximized utilization of LPBs. [Figure not available: see fulltext.].