Abstract: Integrated carbon dioxide (CO₂) capture and methanation (ICCM) is a crucial technology for achieving carbon neutrality, as it converts waste CO₂ into synthetic natural gas through the utilization of dual-functional materials (DFMs). This review systematically synthesizes recent progress in nickel-based DFMs, aiming to clarify the relationships among material design, reaction mechanisms in complex flue gas environments, and engineering challenges associated with process scale-up. The discussion covers various synthesis strategies for adsorbents, including calcium-, magnesium-, and alkali metal-based systems. It critically examines the roles of promoters as well as the influence of reactor configuration and operational parameters. Emphasis is placed on multi-scale structural effects, ranging from macroscopic bed configurations to nanoscale interfacial engineering. Furthermore, deactivation mechanisms caused by realistic flue gas components such as O₂, H₂O, NO_x, and SO₂ are thoroughly summarized. In terms of material optimization, while CaO-based DFMs exhibit exceptional theoretical capacities, their real-world applications are frequently hindered by sintering and thermodynamic limitations. Strategies such as the incorporation of inert supports (e.g., γ-Al₂O₃), the use of layered double hydroxide (LDH) precursors, and alkali-metal doping have proven effective in enhancing component dispersion and cyclic stability. Similarly, MgO-based materials, which often suffer from surface passivation, show significantly improved CO₂ uptake kinetics through the addition of alkali nitrate molten salts. Moreover, the review highlights the important roles played by transition-metal promoters (such as Ru, Zr, Ce) in facilitating low-temperature reduction, refining Ni crystallite size, and generating oxygen vacancies (O_vs) or frustrated Lewis pairs (FLPs) that enhance surface activation. A critical analysis reveals that the proximity between adsorption and catalytic sites is paramount in determining overall reaction efficiency. Constructing nanoscale interfaces with buffer layers (e.g., CeO₂, AlO_x) or employing core-shell structures can proficiently balance mass-transfer efficiency with active site accessibility. Regarding the influence of impurities, the presence of O₂ leads to temporary Ni oxidation, which can assist in coke removal; however, H₂O and NO_x impede the process through competitive adsorption. Notably, SO₂ acts as a significant poison, forming stable sulfates that occupy basic sites and kinetically inhibit the decomposition of critical formate (HCOO^*) intermediates, thus blocking hydrogenation pathways. This review also concludes that the successful industrial implementation of ICCM technology requires a shift in emphasis from laboratory-scale material screening toward integrated engineering-system design. Future research should focus on: (1) the development of highly active, stable, and anti-toxic DFMs; (2) the elucidation of deactivation mechanisms in complex atmospheres using in situ characterization techniques; (3) the design of synergistic multi-pollutant control strategies, such as integrated CO₂/SO₂ and CO₂/NO_x treatment systems; and (4) the engineering of specialized reactors capable of handling the rapid thermal cycling and strongly exothermic nature of the ICCM process.