Salubriousness, sustainability, low environmental footprint, and low production cost make seaweed an exciting food source for meeting food security and nutritional challenges. Seaweeds are increasingly being utilized in various food systems to avail dietary benefits for human health. The supplementation of seaweed with foods imparts its nutritional, techno-functional, and sensory functionalities to the food product. Thus, seaweeds present an interesting prospect to design tailor-made novel food products which are healthy, palatable, and at the same time ‘convenience food’. The utilization of seaweeds for the development of food products is an excellent opportunity for food scientists, technologists, and phycologists for optimal exploitation of this food resource. The appropriate usage of seaweed in food systems could possibly give rise to a novel segment of seaweed-based composite/hybrid health foods. The review briefly summarises the trend and opportunities of seaweed utilization in functional food systems and the modifications occurring in food products upon supplementation with seaweed. Further, the review also discusses food safety concerns such as the presence of toxins, microplastics, heavy metals, and micropollutants in seaweed and challenges in adoption due to neophobia.