Photoelectrochemical (PEC) cells offer the ability to convert electromagnetic energy from our largest renewable source, the Sun, to stored chemical energy through the splitting of water into molecular oxygen and hydrogen. Hematite (α-Fe2O3) has emerged as a promising photo-electrode material due to its significant light absorption, chemical stability in aqueous environments, and ample abundance. However, its performance as a water-oxidizing photoanode has been crucially limited by poor optoelectronic properties that lead to both low light harvesting efficiencies and a large requisite overpotential for photoassisted water oxidation. Recently, the application of nanostructuring techniques and advanced interfacial engineering has afforded landmark improvements in the performance of hematite photoanodes. In this review, new insights into the basic material properties, the attractive aspects, and the challenges in using hematite for photoelectrochemical (PEC) water splitting are first examined. Next, recent progress enhancing the photocurrent by precise morphology control and reducing the overpotential with surface treatments are critically detailed and compared. The latest efforts using advanced characterization techniques, particularly electrochemical impedance spectroscopy, are finally presented. These methods help to define the obstacles that remain to be surmounted in order to fully exploit the potential of this promising material for solar energy conversion.