Formaldehyde is a ubiquitous carcinogenic indoor pollutant. The treatment of formaldehyde has attracted increasing social attention. Over the past few decades, an increasing number of publications have reported approaches for removing indoor formaldehyde. These potential strategies include physical adsorption, chemical catalysis, and biodegradation. Although physical adsorption is widely used, it does not really remove pollution. Chemical catalysis is very efficient but adds the risk of introducing secondary pollutants. Biological removal strategies have attracted more research attention than the first two methods, because it is more efficient, clean, and economical. Plants and bacteria are the common organisms used in formaldehyde removal. However, both have limitations and shortcomings when used alone. This review discusses the mechanisms, applications, and improvements of existing biological methods for the removal of indoor gaseous formaldehyde. A combination strategy relying on plants, bacteria, and physical adsorbents exhibits best ability to remove formaldehyde efficiently, economically, and safely. When this combination system is integrated with a heating, ventilation, air conditioning, and cooling (HVAC) system, a practical combined system can be established in formaldehyde removal. Multivariate interactions of biological and non-biological factors are needed for the future development of indoor formaldehyde removal.