Rapid turnover of organic matter leads to a low efficiency of organic fertilizers applied to increase and sequester C in soils of the humid tropics. Charcoal was reported to be responsible for high soil organic matter contents and soil fertility of anthropogenic soils (Terra Preta) found in central Amazonia. Therefore, we reviewed the available information about the physical and chemical properties of charcoal as affected by different combustion procedures, and the effects of its application in agricultural fields on nutrient retention and crop production. Higher nutrient retention and nutrient availability were found after charcoal additions to soil, related to higher exchange capacity, surface area and direct nutrient additions. Higher charring temperatures generally improved exchange properties and surface area of the charcoal. Additionally, charcoal is relatively recalcitrant and can therefore be used as a long-term sink for atmospheric CO2. Several aspects of a charcoal management system remain unclear, such as the role of microorganisms in oxidizing charcoal surfaces and releasing nutrients and the possibilities to improve charcoal properties during production under field conditions. Several research needs were identified, such as field testing of charcoal production in tropical agroecosystems, the investigation of surface properties of the carbonized materials in the soil environment, and the evaluation of the agronomic and economic effectiveness of soil management with charcoal.