As a solid-state welding technique, friction stir welding (FSW) has many advantages over conventional fusion welding. Its applications in the manufacturing and joining of parts in aerospace, automotive, and shipbuilding have significantly increased. Friction heat generation is the fundamental driver of the FSW process. It governs material flow, microstructural evolution, mechanical properties, and residual stresses. Understanding the effect of heat generated on the joint quality is essential for process parameter optimization, ensuring defect-free welds and high-quality joints. Thus, evaluating the thermal history of the FSW process is a key requirement for effective analysis. This comprehensive review critically discusses research studies published over the past three decades (1991–2025) that have examined different approaches to predict and measure heat generation in FSW. A total of 136 highly relevant articles were selected from the Scopus database and systematically analyzed. The effects of various welding parameters on heat generation, microstructural evolution, and joints’ mechanical properties have been reported. Different heat generation prediction and measurement techniques, such as analytical models, finite element models (FEM), and experimental methods have been discussed in terms of their feasibility, accuracy, advantages, disadvantages, and cost. The evolution, state of the art of analytical models and FEM over the last three decades are analyzed and future research directions are outlined. Finally, the correlation between process parameters, heat generated, microstructural development, and mechanical performance of the welded joints for various workpiece materials is investigated. This review provides a critical and comparative perspective that highlights the strengths and limitations of each method, offering practical guidance for researchers and industry practitioners.