The industrial production of short-chain fructooligosaccharides (FOS) and inulooligosaccharides is expanding rapidly due to the pharmaceutical importance of these compounds. These compounds, concisely termed prebiotics, have biofunctional properties and hence health benefits if consumed in recommended dosages. Prebiotics can be produced enzymatically from sucrose elongation or via enzymatic hydrolysis of inulin by exoinulinases and endoinulinases acting alone or synergistically. Exoinulinases cleave the non-reducing β-(2, 1) end of inulin-releasing fructose while endoinulinases act on the internal linkages randomly to release inulotrioses (F3), inulotetraoses (F4) and inulopentaoses (F5) as major products. Fructosyltransferases act by cleaving a sucrose molecule and then transferring the liberated fructose molecule to an acceptor molecule such as sucrose or another oligosaccharide to elongate the short-chain fructooligosaccharide. The FOS produced by the action of fructosyltransferases are 1-kestose (GF2), nystose (GF3) and fructofuranosyl nystose (GF4). The production of high yields of oligosaccharides of specific chain length from simple raw materials such as inulin and sucrose is a technical challenge. This paper critically explores recent research trends in the production and application of short-chain oligosaccharides. Inulin and enzyme sources for the production of prebiotics are discussed. The mechanism of FOS chain elongation and also the health benefits associated with prebiotics consumption are discussed in detail.