Mid-IR laser in 3-5 μm wavelength region is in the range of atmospheric transmission window, it is in great demand for a variety of applications including molecular spectroscopy, remote sensing for environmental monitoring, industrial process, free space communication, optoelectronic countermeasures. One of the most promising approaches to reach mid-IR spectral range is based on direct lasing of Transition Metal (TM) doped II-VI chalcogenide crystals. Fe2+ ions doped ZnSe laser crystals offer a special blend of physical and spectroscopic parameters that make them the gain media of choice for cost effective broadly tunable lasing in Mid-IR wavelength region. Spectroscopic properties and fabrication methods of Fe:ZnSe crystal were introduced, the development history and technology status of Fe:ZnSe laser were summarized. There are still several challenges to be overcome in the development of affordable room temperature Fe:ZnSe laser including fabrication of high optical quality gain elements and developing high efficient, high energy short pulse pump sources in 3 μm wavelength region. The key problems developing high energy, high power Fe:ZnSe laser at room temperature were analyzed.