Urea in diets of ruminants has been investigated to substitute expensive animal and vegetable protein sources for more than a century, and has been widely incorporated in diets of ruminants for many years. Urea is also recycled to the fermentative parts of the gastrointestinal (GI) tracts through saliva or direct secretory flux from blood depending upon the dietary situations. Within the GI tracts, urea is hydrolyzed to ammonia by urease enzymes produced by GI microorganisms and subsequent ammonia utilization serves the synthesis of microbial protein. In ruminants, excessive urease activity in the rumen may lead to urea/ammonia toxicity when high amounts of urea are fed to animals; and in non-ruminants, ammonia concentrations in the GI content and milieu may cause damage to the GI mucosa, resulting in impaired nutrient absorption, futile energy and protein spillage and decreased growth performance. Relatively little attention has been directed to this area by researchers. Therefore, the present review intends to discuss current knowledge in ureolytic bacterial populations, urease activities and factors affecting them, urea metabolism by microorganisms, and the application of inhibitors of urease activity in livestock animals. The information related to the ureolytic bacteria and urease activity could be useful for improving protein utilization efficiency in ruminants and for the reduction of the ammonia concentration in GI tracts of monogastric animals. Application of recent molecular methods can be expected to provide rationales for improved strategies to modulate urease and urea dynamics in the GI tract. This would lead to improved GI health, production performance and environmental compatibility of livestock production.