Indigo and indigo-like pigments are widely used in the industry of textile, food and medicine. Now people pays more and more attention to developing an alternative method of indigo production which is “environment-friendy”, especially microbial biosynthesis of indigo. Many microorganisms involved in the biosynthesis of indigo have been isolated and characterized, and monooxygenase and dioxygenase have been identified to catalyze indigo biosynthesis. Some genes encoding for these enzymes have been cloned and used to construct “engineering bacteria”. With this kind of bacteria, more efficient fermentation systems for indigo production have been exploited. In the meantime, biotransformation of the indigo produced by microorganisms has been under investigation. These progresses will bring us a greener method of indigo and indigo-like pigments production.