The intense global competition to produce quality product at low cost has led many industrial nations to consider mechanical tolerances as a key factor to bring about cost savings as well as be competitive. In the last two decades, not enough research work has been done in the area of tolerance techniques. In this paper, a comprehensive summary of the state of the art and the projection of future trends in tolerance techniques is presented to help make a decision concerning the improvement techniques today and to aid in guiding research for the future. This paper reviews the status of theory and practice about how manufacturing and assembly processes are characterized for relating tolerances to process or production cost. The specification of tolerancing on the dimension of the manufactured part has a significant impact on the final production cost. Tight tolerances can result in excessive process cost, while loose tolerances may lead to increased waste and assembly problems. This paper systematically reviews the state of art by classifying the papers written so far into three categories. The categories are tolerance chain technique, tolerances based on analysis and synthesis, and tolerances based on cost-tolerance algorithms and design methods. Future areas of research and the unresolved issues have been presented that will serve as a guiding light for the researcher to investigate and bring about the solution in future.