Water is critical for life, but many people do not have access to clean and safe drinking water and die because of waterborne diseases. The analysis of drinking water for the presence of indicator microorganisms is key to determining microbiological quality and public health safety. However, drinking water-related illness outbreaks are still occurring worldwide. Moreover, different indicator microorganisms are being used in different countries as a tool for the microbiological examination of drinking water. Therefore, it becomes very important to understand the potentials and limitations of indicator microorganisms before implementing the guidelines and regulations designed by various regulatory agencies. This review provides updated information on traditional and alternative indicator microorganisms with merits and demerits in view of their role in managing the waterborne health risks as well as conventional and molecular methods proposed for monitoring of indicator and pathogenic microorganisms in the water environment. Further, the World Health Organization (WHO) water safety plan is emphasized in order to develop the better approaches designed to meet the requirements of safe drinking water supply for all mankind, which is one of the major challenges of the 21st century.