The technique of acoustic levitation normally produces a standing wave and the potential well of the sound field can be used to trap small objects. Since no solid surfaces is involved it has been widely applied for the study of fluid physics, nucleation, bio/chemical processes, and various forms of soft matter. In this article, we survey the works on drop dynamics in acoustic levitation, focus on how the dynamic behavior is related to the rheological properties and dicuss the possibility to develop a novel rheometer based on this technique. We review the methods and applicatiom of acoustic levitation for the manipulation of both liquid and soild samples and emphasize the important progress made in the study of phase transitions and bio-chemical analysis. We also highlight the possible open areas for future reseach.