Electrocatalytic CO₂ reduction to methanol (MeOH) unites two urgent global needs, carbon recycling and renewable energy storage, into a single, compelling chemical transformation. According to recent techno-economic analyses, commercially competitive MeOH production (at ≈$190 per ton) can be achieved via electroreduction by meeting practical targets for current density, Faradaic efficiency (FE), and stability. Moreover, MeOH's high energy density (16 MJ L⁻¹), substantial hydrogen content (100 g H₂ per L), and low storage and transport costs further underscore its strong economic potential. Yet, the complexity of the six-electron–proton transfer (ET–PT) process that governs its formation remains intrinsically complex, with competing pathways threatening selectivity at every stage. This review critically examines current mechanistic insights, highlighting key intermediates such as CO and OCH₃, and demonstrating how catalyst surfaces and reaction conditions profoundly influence pathway divergence. We highlight recent advances in catalyst development that exploit a fundamental, molecular-level understanding of intermediate stabilization to deliver unprecedented MeOH selectivity and activity. Through detailed analysis of operational parameters—including mass transport dynamics, electrolyte composition, and applied potentials—this work provides a comprehensive framework for rational catalyst development. Together, these insights converge design principles for next-generation electrocatalysts capable of selectively converting CO₂-to-MeOH at scale, advancing economically viable and environmentally sustainable MeOH production.