State estimation (SE) is well-established at the transmission system level of the electricity grid, where it has been in use for the last few decades and is a most vital component of energy management systems employed in the monitoring and control centers of electric transmission systems. However, its use for the monitoring and control of power distribution systems (DSs) has not yet been widely implemented because DSs have been majorly passive with uni-directional power flows. This scenario is now changing with the advent of smart grid, which is changing the nature of electric distribution networks by embracing more dispersed generation, demand responsive loads, and measurements devices with different data rates. Thus, the development of distribution system state estimation (DSSE) tool is inevitable for the implementation of protection, optimization, and control techniques, and various other features envisioned by the smart grid concept. Due to the inherent characteristics of DS different from those of transmission systems, transmission system state estimation (TSSE) is not applicable directly to DSs. This paper is an attempt to present the state-of-the-art on DSSE as an enabler function for smart grid features. It broadly reviews the development of DSSE, challenges faced by its development, and various DSSE algorithms. Additionally, it identifies some future research lines for DSSE.