Citizen participation has emerged as a cornerstone of modern governance, reflecting a transition from hierarchical government-centered approaches toward more inclusive and collaborative decision-making processes. This review examines the theoretical foundations, mechanisms, outcomes, challenges, and future directions of citizen participation within collaborative governance frameworks. The review explores key theoretical perspectives, including Arnstein’s Ladder of Participation, Network Governance Theory, the Collaborative Governance Framework, and Co-production Theory, which collectively explain how stakeholders engage in governance processes. Various participation mechanisms, such as public consultations, participatory budgeting, citizen assemblies, digital participation platforms, and community-based governance, are discussed in relation to their contributions to policy effectiveness, public trust, service delivery, social inclusion, and environmental sustainability. The review also highlights persistent barriers, including power asymmetries, tokenism, resource limitations, digital divides, and stakeholder conflicts. Emerging trends such as digital participation, artificial intelligence-supported engagement, open government initiatives, citizen science, and data-driven governance are examined as transformative developments shaping future governance practices. The findings underscore the importance of inclusive, transparent, and adaptive governance systems that promote meaningful citizen engagement and sustainable public outcomes.