Emissions of CO2 from different sectors including oil and gas, energy, agriculture and industries have increased significantly over the past decades. In order to achieve carbon reduction target of cutting down carbon intensity against gross domestic product (GDP) by 45% by 2030 compared to 2010 and reaching net zero emission by 2050 as per stated in Paris Climate Agreement, Carbon Capture, Utilization and Storage (CCUS) technology have been widely applied to alleviate the CO2 emissions problem. Among the CO2 utilization strategies, conversion of CO2 to dimethyl ether (DME) is considered as one of the most attractive routes for the large-scale CO2 valorization due to its advantage to serve as an alternative fuel for diesel and wide application in various industry which leads to large global market size for DME. Synthesis of DME from CO2 can be achieved through both indirect and direct synthesis processes in which indirect synthesis of DME will undergo CO2 hydrogenation over metallic catalyst and dehydration of methanol over acid catalyst separately, while direct synthesis of DME will undergo both reactions within a single reactor over a bifunctional catalyst. However, low CO2 conversion, low DME selectivity and also rapid catalyst deactivation due to the formation of water throughout the DME synthesis process have attracted increased attentions from researchers of modifying metallic catalysts through addition of zirconium, iron, palladium and other element as promoter, discover alternative acid catalysts to replace commercial gamma-Al2O3 and to develop bifunctional catalyst through combining metallic catalyst with acid catalyst to enable the operation of direct DME synthesis. Thus, a series of researches have been conducted to study the performance of different catalysts under different combination of elements in order to improve the DME yield from the reaction. Aside from that, another strategy has also been performed in past few years by application of water selective membrane layer in the DME synthesis process to reduce the impacts of water formation towards the DME yields. Thus, in-situ water removal performance for different types of polymeric and zeolite membranes as well as duallayer (FAU-LTA) membrane in DME synthesis have been investigated in recent years. In this review paper, development and performance of several main types of metallic catalysts, acid catalysts, bifunctional catalysts and water selective hydrophilic membrane which have been reported will be discussed to understand the gaps for current research on DME synthesis. In the aspect of future work, the performance for different combinations of bifunctional catalysts with water selective removal layer in direct DME synthesis need to be explored. Besides, the use of metallic catalyst together with acidic water selective membrane or dual layer membrane can be a potential future trend to improve CO2 conversion and DME yield.