Gaseous compounds, such as CH4, H2, and O2, are commonly produced or consumed during wastewater treatment. Traditionally, these gases need to be removed or delivered using gas sparging or liquid heating, which can be energy intensive with low efficiency. Hydrophobic membranes are being increasingly investigated in wastewater treatment and resource recovery. This is because these semipermeable barriers repel water and create a three-phase interface that enhances mass transfer and chemical conversions. This Critical Review provides a first comprehensive analysis of different hydrophobic membranes and processes, and identifies the challenges and potential for future system development. The discussions and analyses were grouped based on mechanisms and applications, including membrane gas extraction, membrane gas delivery, and hybrid processes. Major challenges, such as membrane fouling, wetting, and limited selectivity and functionality, are identified, and potential solutions articulated. New opportunities, such as electrochemical coating, integrated membrane electrodes, and membrane functionalization, are also discussed to provide insights for further development of more efficient and low-cost membranes and processes.