Lignocellulosic agro-industrial residues are a valuable source for oligosaccharide production, supporting the biorefinery concept and advancing innovative production strategies. This review focuses on xylooligosaccharides (XOS) production from various lignocellulosic residues, focusing on xylan as a primary feedstock. It discusses conventional methods (acid hydrolysis, autohydrolysis, enzymatic hydrolysis) and novel approaches (submerged fermentation, solid-state fermentation, deep eutectic solvents), evaluating their benefits, challenges, and optimization potential. The prebiotic activity of XOS, as well as its physicochemical, technological, and sensory properties, underscores its suitability for food applications. The review also explores regulatory frameworks, especially in Brazil, and market insights that influence the commercial value and growth of XOS. Despite growing interest, no standardized production process exists. Moreover, process conditions and feedstock selection remain critical for optimizing yields. Further research is essential to developing more efficient, standardized, and sustainable methods, alongside in vivo studies to ensure regulatory compliance, unlocking the full potential of XOS in the food industry and other sectors.