In this article, we summarized the recent progress made on photocatalytic and photoelectrochemical reduction of carbon dioxide (CO₂) to methanol (CH₃OH) in aqueous medium on various photocatalytic materials, photoactive and electrocatalytic electrodes. We have provided a critical analysis as to how the final products were found to depend on the type of photocatalyst and photo electrocatalyst used. We have delineated the synthesis of some novel photocatalysts that preferentially convert CO₂ to methanol as a major or a sole product. We also discussed the reactions and parameters that are critical in enhancing the reduction yield of carbon dioxide to methanol which remains to be the major challenge. Most importantly, we explained as to why the photocatalytic reduction rates of CO₂ to methanol on nanomaterials are lower compared to those on photoelectrodes and explained the ways these rates can be enhanced in future studies. Furthermore, we highlighted the intriguing challenges involved in efficient conversion of CO₂ directly to methanol in aqueous medium and provided possible ways to address them.