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Demand Response: From Classification to Optimization Techniques in Smart Grid In conventional grids, consumer has not been con-side red for solving the problems associated with electric industry. In order to meet the ever increasing consumers’ demand, conventional methods primarily rely on increasing generation capacity which is not a feasible solution due to limited resources. Thus, the overall efficiency of electrical networks needs to be improved. From this perspective, the idea of smart grids has transformed the conventional power system into an intelligent and smart one. Smart grid is not a single technology, rather, it is merger of electrical power networks with communications network. Moreover, there are two basic players in the smart grid, utility and consumer. In response to different pricing schemes, introduced by the utility, smart grid transforms the consumer into a prosumer via Demand Response (DR). Thus, enabling the consumer to become an important player in energy management and optimization. This paper embeds a two fold contribution, (i)classification of DR techniques based on the chosen criteria, and (ii) distinctive discussion of latest DR optimization techniques. It is foreseen that this paper will help in determining future research directions and design efforts for developing DR techniques.