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Background/Objectives: Microorganisms such as bacteria, viruses, and fungi are frequently the cause of infections. Antimicrobial agents, such as antibiotics, antivirals, and antifungals, are used to target and eliminate these infectious agents. On the other hand, inflammation is a natural response of the immune system to injury, infection, or irritation. Although herbal remedies have been used to treat these conditions for centuries and can be effective in certain situations, it is crucial to use them with caution. Not all herbal remedies are supported by scientific evidence, and their safety and efficacy can vary. Thus, we conducted this review to determine the potential health benefits of agarwood as an antimicrobial and anti-inflammatory agent. Methods: Three databases (PubMed, Scopus, and Google Scholar) were used to search for original papers submitted between 2013 and 2023, using the Medical Subject Heading (MeSH) terms “agar-wood” crossed with the terms “antimicrobial” and/or “anti-inflammatory”. Synonyms and relevant search terms were also searched. Results: The most-studied agarwood for antimicrobial and anti-inflammatory agents is Aquilaria sinensis. Some studies have shown its potential application as a potent inhibitor of fungi, including Lasiodiplodia theobromae, Fusarium oxysporum, and Candida albicans. Moreover, it is capable of inhibiting Bacillus subtilis and Staphylococcus aureus activities. Several chromones detected in agarwood have been shown to inhibit NF-κB activation, LPS-induced NO production, and superoxide anion generation. In conclusion, more research is needed, particularly regarding future intervention studies, to enhance our knowledge and understanding of agarwood and its isolates. Conclusions: This review reveals that despite the absence of clinical trials, agarwood exhibits antimicrobial and anti-inflammatory properties.