This review explores current advancements in microbiome functional analysis enabled by next-generation sequencing technologies, which have transformed our understanding of microbial communities from mere taxonomic composition to their functional potential. We examine approaches that move beyond species identification to characterize microbial activities, interactions, and their roles in host health and disease. Genome-scale metabolic models allow for in-depth simulations of metabolic networks, enabling researchers to predict microbial metabolism, growth, and interspecies interactions in diverse environments. Additionally, computational methods for predicting metabolite profiles offer indirect insights into microbial metabolic outputs, which is crucial for identifying biomarkers and potential therapeutic targets. Functional pathway analysis tools further reveal microbial contributions to metabolic pathways, highlighting alterations in response to environmental changes and disease states. Together, these methods offer a powerful framework for understanding the complex metabolic interactions within microbial communities and their impact on host physiology. While significant progress has been made, challenges remain in the accuracy of predictive models and the completeness of reference databases, which limit the applicability of these methods in under-characterized ecosystems. The integration of these computational tools with multi-omic data holds promise for personalized approaches in precision medicine, allowing for targeted interventions that modulate the microbiome to improve health outcomes. This review highlights recent advances in microbiome functional analysis, providing a roadmap for future research and translational applications in human health and environmental microbiology.