Polysaccharide monooxygenases (PMOs), also known as lytic PMOs (LPMOs), enhance the depolymerization of recalcitrant polysaccharides by hydrolytic enzymes and are found in the majority of cellulolytic fungi and actinomycete bacteria. For more than a decade, PMOs were incorrectly annotated as family 61 glycoside hydrolases (GH61s) or family 33 carbohydrate-binding modules (CBM33s). PMOs have an unusual surface-exposed active site with a tightly bound Cu(II) ion that catalyzes the regioselective hydroxylation of crystalline cellulose, leading to glycosidic bond cleavage. The genomes of some cellulolytic fungi contain more than 20 genes encoding cellulose-active PMOs, suggesting a diversity of biological activities. PMOs show great promise in reducing the cost of conversion of lignocellulosic biomass to fermentable sugars; however, many questions remain about their reaction mechanism and biological function. This review addresses, in depth, the structural and mechanistic aspects of oxidative depolymerization of cellulose by PMOs and considers their biological function and phylogenetic diversity.