Functional foods and nutraceuticals are a rapidly growing segment in the food and health industries, distinguished by their ability to promote health, prevent illness, and increase well-being beyond basic nutritional functions. This book chapter begins with a thorough taxonomy and typology before diving into the complex world of functional foods and nutraceuticals. It examines the many categories, explaining their unique compositions and qualities, from probiotics and prebiotics to fortified foods and nutritional supplements. The next section of the chapter delves into the mechanisms of action, showing how these products affect physiological processes to provide health advantages including better gut health, heightened immunity, and decreased risk of chronic illnesses. A thorough examination of consumer insights and industry trends uncovers changing consumer preferences, the forces propelling market expansion, and new developments in product development. The chapter also discusses the regulatory environment, looking at the norms, policies, and difficulties involved in guaranteeing the security, effectiveness, and caliber of nutraceuticals and functional foods. This chapter attempts to give a thorough grasp of the scientific, business, and regulatory aspects of this rapidly changing industry by taking a comprehensive approach.