In the pursuit of more sustainable and energy-efficient buildings, the integration of photovoltaic (PV) technology into building facades, specifically as Facade-Integrated Photovoltaics (FIPV) within smart windows, has gained substantial attention. However, transitioning this innovative technology from theory to practice faces numerous technical, regulatory, and economic challenges. This review seeks to explore these challenges through an in-depth analysis of secondary data and existing literature, covering the operation mechanism, materials, and technologies involved. In light of the scrutinized case studies, the review discusses the current market state, identified hurdles, and potential solutions, providing a roadmap for future research directions. The implications of FIPV for sustainable construction and green urbanism are also examined, focusing on the technology's contribution to broader climate action goals. The insights provided by this review are aimed at aiding architects, engineers, and policymakers in their decision-making processes related to the adoption and regulation of FIPV in smart windows.