Wastewater-based microbial fuel cell is a promising green technology that can potentially be used to treat recalcitrant wastewater such as textile wastewater through in situ Fenton oxidation while generating net positive energy. One of the main features of this technology is the use of membranes for isolating the cathode chamber for in situ H2O2 production (thus in situ Fenton oxidation). The challenges in this technology include membrane fouling and resistance, pH splitting, oxygen diffusion, substrate crossovers, effect of Fenton's reagents and high cost of commercially available membranes. Therefore, this paper critically analyzes each challenge in detail to access their direct or indirect effects on the overall performance. Exploration of new materials and modifications of existing materials has produced cost-efficient and reliable membranes. However, their application in in situ Fenton oxidation has not been demonstrated. It is concluded that the use of membranes with high hydrophilicity, small pore size and materials enriched with sulfonated groups is suitable for in situ H2O2 production in the cathode chamber. Moreover, use of cleaning agents such as H2O2 or H2SO4 recovers the membrane performance for in situ H2O2 production. Thus, it offers a green technology because in situ H2O2 can be used for membrane cleaning and energy produced can be used for aeration of the cathode chamber.