Energy storages introduce many advantages such as balancing generation and demand, power quality improvement, smoothing the renewable resource’s intermittency, and enabling ancillary services like frequency and voltage regulation in microgrid (MG) operation. Hybrid energy storage systems (HESSs) characterized by coupling of two or more energy storage technologies are emerged as a solution to achieve the desired performance by combining the appropriate features of different technologies. A single ESS technology cannot fulfill the desired operation due to its limited capability and potency in terms of lifespan, cost, energy and power density, and dynamic response. Hence, different configurations of HESSs considering storage type, interface, control method, and the provided service have been proposed in the literature. This paper comprehensively reviews the state of the art of HESSs system for MG applications and presents a general outlook of developing HESS industry. Important aspects of HESS utilization in MGs including capacity sizing methods, power converter topologies for HESS interface, architecture, controlling, and energy management of HESS in MGs are reviewed and classified. An economic analysis along with design methodology is also included to point out the HESS from investor and distribution systems engineers view. Regarding literature review and available shortcomings, future trends of HESS in MGs are proposed.