Among the materials, composites have unique properties due to less weight and high strength thus meeting the specific requirements for given applications with greater advantages. However, functionally graded materials (FGMs) are a special class of composites. FGMs gained more importance because they have diversified and potential applications in various areas such as automotive, marine, aerospace, medical, etc. FGMs have good mechanical properties and can retain the properties even at high temperatures if design and process is proper. The development of FGMs offers freedom to develop the components with specific properties along different directions with various ratios. The FGMs are fabricated by various methods with various sizes. Hence, in this work, a review of various processing methods for surface coatings and bulk FGMs, FGM applications, and recent research activities on FGMs with more emphasis on additive manufacturing (AM) processes have been done. © 2018 Elsevier Ltd. All rights reserved.