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Developing new colors for the food industry is challenging, as colorants need to be compatible with a food flavors, safety, and nutritional value, and which ultimately have a minimal impact on the price of the product. In addition, food colorants should preferably be natural rather than synthetic compounds. Micro-organisms already produce industrially useful natural colorants such as carotenoids and anthocyanins. Microbial food colorants can be produced at scale at relatively low costs. This review highlights the significance of color in the food industry, why there is a need to shift to natural food colors compared to synthetic ones and how using microbial pigments as food colorants, instead of colors from other natural sources, is a preferable option. We also summarize the microbial derived food colorants currently used and discuss their classification based on their chemical structure. Finally, we discuss the challenges faced by the use and development of food grade microbial pigments and how to deal with these challenges, using advanced techniques including metabolic engineering and nanotechnology.