Isomaltulose as a functional isomer of sucrose has attracted much more attention in the industrial application due to its attractive features such as non-cariogenic, prebiotic and diabetics-acceptable nutrient and resistance to most bacteria and yeasts. It has been proved that sucrose isomerase not only transforms sucrose to isomaltulose and trehalulose, but also produce a small amount of glucose and fructose as by-products, which is a considerable industrial problem because elaborate purification are necessary to remove them. In this paper, we discuss the characteristics and functions of isomaltulose as well as potential problems in its production. Particularly, we focus on the catalytic mechanism of sucrose conversion by sucrose isomerase, which is in favour of developing isomaltulose in the application of foodstuff.