For decades now, photoacoustic imaging (PAI) has been investigated to realize its potential as a niche biomedical imaging modality. Despite its highly desirable optical contrast and ultrasonic spatiotemporal resolution, PAI is challenged by such physical limitations as a low signal-to-noise ratio (SNR), diminished image contrast due to strong optical attenuation, and a lower-bound on spatial resolution in deep tissue. In addition, contrast-enhanced PAI has faced practical limitations such as insufficient cell-specific targeting due to low delivery efficiency and difficulties in developing clinically translatable agents. Identifying these limitations is essential to the continuing expansion of the field, and substantial advances in developing contrast-enhancing agents, complemented by high-performance image acquisition systems, have synergistically dealt with the challenges of conventional PAI. This review covers the past four years of research on pushing the physical and practical challenges of PAI in terms of SNR/contrast, spatial resolution, targeted delivery, and clinical application. Promising strategies for dealing with each challenge are reviewed in detail, and future research directions for next generation contrast-enhanced PAI are discussed.