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Fragrant peanut oils (FPOs) are commonly defined as edible peanut oils having strong natural roasted peanut flavor without peculiar unpleasant odors and produced from peanut kernels through roasting/steaming and pressing operations, etc. The flavor of FPOs plays a crucial role in their acceptability and applications and their flavor profiles are an important factor in determining their overall quality. This paper presents a systematic literature review of recent advances and knowledge on FPOs, especially their flavors, in which it is focused on the evaluation of volatile compounds, the factors influencing the formation of flavor compounds, and formation mechanisms of those typical flavor compounds. More than 300 volatiles are found in FPOs, while some key aroma-active compounds and their potential formation pathways are examined. Factors that have big influences on flavor are discussed also, including the properties of raw materials, processing technologies, and storage conditions. Ultimately, the paper highlights the challenges facing, including the challenges in flavor analysis, the relationship between volatile compounds and sensory attributes, as well as the opening of the blackboxes of flavor formations during the processing steps, etc.