Anaesthesia is a cornerstone of modern aquaculture practice playing a crucial role in routine fish husbandry procedures and research activities. The present review discusses about anaesthetic use in fish, including commonly used synthetic agents such as MS-222, benzocaine, metomidate, quinaldine, 2-phenoxyethanol, and propofol, together with emerging plant-derived anaesthetics, especially clove oil and other essential oils that have reduced environmental impact. Attention is drawn to the physiological basis of anaesthesia in relation to fish welfare, inclusive of both sedation and general anaesthesia, emphasizing their role in mitigating stress. The review outlines the classical stages of anaesthesia in fish and summarizes important physiological and biochemical responses associated with the use of various anaesthetics. Pharmacokinetic processes, including absorption, primarily across the gills, tissue distribution, metabolism, and excretion are also discussed. Regulatory regimes governing approved anaesthetics are summarized to highlight compliance requirements in aquaculture settings. Particular attention is paid to the use of anaesthetics during transport, where light sedation is shown to effectively decrease metabolic rate thereby significantly improving fish welfare. Finally, the review points towards emerging future directions including the development of eco-friendly plant-based anaesthetics and nanotechnology-enhanced formulations aimed at improving solubility, stability, and efficacy of anaesthetic agents.