The instability of traditional glycoside hydrolases in the harsh conditions of pretreatment hinders the industrial scale enzymatic synthesis of the xylo-oligosaccharides using lignocellulosic biomass from agricultural wastes. However, extremophilic xylanases found in thermophiles, halophiles, and acidophiles/alkaliphiles, are intrinsically stable at high temperatures, extreme pH, and high salinity. Their resilience is based on discrete molecular adaptation such as ion-pair networks, hydrophobic cores, and surface electrostatics. In this review, extremophilic xylanase engineering using protein engineering and synthetic biology strategies for xylo-oligosaccharide production is systematically summarized. Meanwhile, techno-economic and life cycle assessments confirm improved sustainability and economic efficiency of XOS production in the context of a biorefinery. In the future, further effort will still be required for extremophilic xylanases to enhance the commercial implementation of the process towards sustainable bioprocessing.