This paper presents a critical review of the literature on the application of genetically engineered microorganisms (GEMs) in bioremediation. The important aspects of using GEMs in bioremediation, such as development of novel strains with desirable properties through pathway construction and the modification of enzyme specificity and affinity, are discussed in detail. Particular attention is given to the genetic engineering of bacteria using bacterial hemoglobin (VHb) for the treatment of aromatic organic compounds under hypoxic conditions. The application of VHb technology may advance treatment of contaminated sites, where oxygen availability limits the growth of aerobic bioremediating bacteria, as well as the functioning of oxygenases required for mineralization of many organic pollutants. Despite the many advantages of GEMs, there are still concerns that their introduction into polluted sites to enhance bioremediation may have adverse environmental effects, such as gene transfer. The extent of horizontal gene transfer from GEMs in the environment, compared to that of native organisms including benefits regarding bacterial bioremediation that may occur as a result of such transfer, is discussed. Recent advances in tracking methods and containment strategies for GEMs, including several biological systems that have been developed to detect the fate of GEMs in the environment, are also summarized in this review. Critical research questions pertaining to the development and implementation of GEMs for enhanced bioremediation have been identified and posed for possible future research.