Supported nanoparticles have attracted considerable attention as a promising catalyst for achieving unique properties in numerous applications, including fuel cells, chemical conversion, and batteries. Nanocatalysts demonstrate high activity by expanding the number of active sites, but they also intensify deactivation issues, such as agglomeration and poisoning, simultaneously. Exsolution for bottom-up synthesis of supported nanoparticles has emerged as a breakthrough technique to overcome limitations associated with conventional nanomaterials. Nanoparticles are uniformly exsolved from perovskite oxide supports and socketed into the oxide support by a one-step reduction process. Their uniformity and stability, resulting from the socketed structure, play a crucial role in the development of novel nanocatalysts. Recently, tremendous research efforts have been dedicated to further controlling exsolution particles. To effectively address exsolution at a more precise level, understanding the underlying mechanism is essential. This review presents a comprehensive overview of the exsolution mechanism, with a focus on its driving force, processes, properties, and synergetic strategies, as well as new pathways for optimizing nanocatalysts in diverse applications.