Tomato (Solanum lycopersicum) is an economically important vegetable crop grown in tropical and sub-tropical parts of the world. The objective of this paper is to review nutritional benefits of tomato, its different bioactive components and their application in food products. Tomato and tomato products are very beneficial to our health as they decrease the risk of many diseases, such as cancer, asthma, heart disease etc. The whole fruit of tomato i.e pomace, seed and tomato solids have many nutraceutical benefits and is extensively used in food processing industry either as raw or in powder form. Many bioactive components are present in tomato, such as lycopene, oleoresin, carotenoids etc. Tomato is very popular for high content of antioxidant compounds and antioxidant activity. It is preserved mainly by drying (tray drying, freeze drying) and encapsulation process. We have tried to focus on to get the answer, which one is better in food application, lycopene supplementation or direct tomato powder fortification in food products.