Guar gum, a galactomannan polysaccharide obtained from the endosperm of Cyamopsis tetragonoloba (cluster bean), has progressed from a conventional food hydrocolloid to a high-value functional and nutraceutical ingredient. Its physicochemical versatility, physiological functionality as a soluble dietary fiber, and compatibility with modern health-oriented food systems have positioned guar gum as a key biopolymer in functional food development. This review critically examines the chemistry, structure–function relationships, processing and modification strategies, and recent advances in the application of guar gum in functional foods and nutraceuticals. Particular emphasis is placed on metabolic health, glycemic control, cholesterol reduction, gut microbiota modulation, and formulation strategies that enhance consumer acceptability. Emerging trends, challenges, and future research directions are also discussed to support innovation and value addition in guar gum-based health products.