Polycyclic aromatic hydrocarbons (PAHs) and their derivatives are common pollutants that require effective remediation techniques. PAH biodegradation using bacterial and fungal enzymes has gained popularity because it effectively removes these contaminants. Ligninolytic enzymes (LEs), such as laccase (Lac), lignin peroxidase (LiP), manganese peroxidase (MnP), and versatile peroxidases (VPs), have been studied for their role in PAHs biodegradation. These enzymes, produced by different living organisms, have demonstrated significant potential in degrading complex PAH structures, contributing to cleaner and more sustainable remediation techniques. This review evaluates the biodegradation capacity of PAHs using different strains and/or their LEs and provides an in-depth analysis of their mechanisms and removal efficiencies. In addition, the fundamental catalytic mechanisms governing the biodegradation of PAHs and factors that must be optimized to promote effective breakdown and detoxification are highlighted. This review also highlights recent biosensor developments that provide enhanced sensitivity and specificity for PAH detection. Although some LE-producing strains are efficient in completely biodegrading certain PAH types, further research is needed to explore the complete biodegradation of PAHs with higher molecular structures using genetically modified strains or their LEs. Despite progress, challenges remain in optimizing enzyme activity and integrating biosensors into large-scale use. Future research should focus on enhancing stability and improving field deployment for better environmental monitoring.