The pursuit of decarbonizing industries has led to a focus on the importance of carbon capture and utilization (CCU) for urea production globally and in Canada. Canada’s commitment to achieving net-zero emissions by 2050 highlights the urgency for environ- mentally friendly pathways for urea production to reduce carbon emissions. From this perspective, this review provides a comprehensive analysis of the status, prospects, challenges, production technologies, and applications of carbon dioxide (CO2) utilization for urea synthesis based on existing and ongoing research and industry reports. Moreover, it compares and examines various traditional and modern urea production technologies for converting CO2 into urea, along with their operating conditions, efficacy, scalability, and technology readiness levels (TRLs). It also investigates the market trends, future demand forecasts, and potential market dynamics affecting CO2 utilization for urea production. Particularly, this review provides information on the current state of CO2 utilization in Canada, reviewing regulatory frameworks, and identifying technical and economic barriers such as catalyst development, process optimization, high capital costs, life cycle assessments (LCAs), and long-term sustainability. Furthermore, the present study explores Canada’s potential for urea production, highlighting its technological, economic, and environmental benefits, and the importance of innovation and research and development (R&D) in CO2 utilization technologies. Finally, the paper highlights future research, innovation, and collaboration, emphasizing the need for continued investment, supportive policies, and market development efforts. It calls for optimizing CO2 utilization technologies, developing cost-effective solutions, and fostering partnerships between industry stakeholders and governmental bodies. This study can aid in creating a systematic roadmap for utilizing captured CO2 in urea production, aligned with Canada’s Net-Zero 2050 targets.