This literature review examines two major areas: firstly, the impact of teachers’ knowledge about formative assessment on teachers' practices in the classroom; secondly, the role of formative assessment in raising students’ metacognition and how formative activities lead to raising students’ self-awareness and self-regulation. This paper also aims to shed light on the interdependence relation between formative assessment and teaching in general. Ten different primary studies relevant to formative assessment and its effects on teaching/learning have been chosen to investigate the formative assessment in relation with the school subjects and particularly with English as a Foreign Language. The data was collected by exploring different electronic websites. The results of this literature review show that teachers' knowledge of the formative assessment has significant influencing factors on their practices and on supporting students’ metacognition; however, the implementation of formative assessment continues to be hazy.