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Synthetic colors have been widely used in various industries including food, textile, cosmetic and pharmaceuticals. However, toxicity problems caused by synthetic pigments have triggered intense research in natural colors and dyes. Among the natural Sources, pigment producing microorganisms hold a promising potential to meet present-day challenges. Furthermore, natural colors not only improve the marketability of the product but also add extra features like anti-oxidant, anti-cancer properties etc. In this review, we present various sources of microbial pigments and to explore their biological and clinical properties like antimicrobial, antioxidant, anticancer and anti inflammatory. The study also emphasizes upon key parameters to improve the bioactivity and production of microbial pigments for their commercial use in pharmacological and medical fields.