Chlorite is a serious environmental concern, as rising concentrations of this harmful anthropogenic compound have been detected in groundwater, drinking water, and soil. Chlorite dismutases (Clds) are therefore important molecules in bioremediation as Clds catalyze the degradation of chlorite to chloride and molecular oxygen. Clds are heme b-containing oxidoreductases present in numerous bacterial and archaeal phyla. This review presents the phylogeny of functional Clds and Cld-like proteins, and demonstrates the close relationship of this novel enzyme family to the recently discovered dye-decolorizing peroxidases. The available X-ray structures, biophysical and enzymatic properties, as well as a proposed reaction mechanism, are presented and critically discussed. Open questions about structure-function relationships are addressed, including the nature of the catalytically relevant redox and reaction intermediates and the mechanism of inactivation of Clds during turnover. Based on analysis of currently available data, chlorite dismutase from Candidatus Nitrospira defluvii is suggested as a model Cld for future application in biotechnology and bioremediation. Additionally, Clds can be used in various applications as local generators of molecular oxygen, a reactivity already exploited by microbes that must perform aerobic metabolic pathways in the absence of molecular oxygen. For biotechnologists in the field of chemical engineering and bioremediation, this review provides the biochemical and biophysical background of the Cld enzyme family as well as critically assesses Cld's technological potential.