Production of chemicals using renewable bioresources and green biomanufacturing processes is highly important for sustainable bioeconomy. Diols are important bulk chemicals widely used in the production of polymers, cosmetics, fuels, food, and pharmaceutical industries due to their versatile functional properties. Currently, most of diols are produced mainly from fossil resources via energy-cost chemical approaches. The development of biosynthetic routes for the production of diols from renewable resources such as biomass and C₁ has garnered significant attention due to its potential in reducing the utilization of fossil resources and carbon dioxide emissions. Although biological production of 1,3-propanediol, 1,3-butanediol and 1,4-butanediol has been commercialized, the biosynthesis of other major diols remains challenging due to the absence of efficient natural biosynthetic pathways and low efficiency of the recombinant microbes. Recent development of metabolic engineering and synthetic biology enables the production of non-natural chemicals via artificial metabolic pathways and novel biological parts, significantly expanding the boundary of biomanufacturing. This review comprehensively explores recent advances in the microbial synthesis of diols, emphasizing the development of new pathways and engineering strategies for the biosynthesis of C₂ to C₅ diols. Especially, we focus on the innovative approaches include constructing non-natural synthetic pathways to achieve the biosynthesis of non-natural diols, or using alternative carbon sources such as lignocellulose through specific metabolic pathways to synthesize diols. Furthermore, this review also discusses the primary challenges and future perspectives in transforming these biosynthetic processes toward industrial applications. Key challenges involve the accessibility of low-cost and sustainable raw materials, the complexities in scaling up these processes, the development of extraction techniques that cater to specific downstream requirements, and the economic assessment of these processes to ensure profitability and sustainability. These advancements are essential for the economic and environmental viability of producing diols from renewable resources, thereby facilitating the transition to more sustainable industrial practices globally.