Electrical steels, also known as silicon steels, play an essential role in the generation, transmission, and use of electricity. The magnetic quality of electrical steels and thus the energy efficiency of electromagnetic devices are highly dependent on the thermomechanical processing procedures employed to manufacture the electrical steel sheets. Every processing step, from casting, hot rolling, cold rolling to annealing, introduces a specific microstructure and texture, which influences the microstructure and texture of next processing steps as well as the final magnetic properties. In this paper, both types of electrical steel, i.e., grain-oriented electrical steel (GOES) and non-oriented electrical steel (NOES), are reviewed bearing in mind that NOES has perhaps received less attention till now. The magnetism of ferromagnetic materials and the metallurgical factors that affect the magnetic properties of electrical steels are first briefly discussed. The effect of each thermomechanical processing step on the formation of the microstructure and texture of the final electrical steel sheets is then scrutinised. The status and challenges in optimising the crystallographic texture of electrical steels are discussed. Future directions to the development of energy-efficient and cost-effective electrical steels are pointed out.