<p>Water-jet guided laser (WJGL) machining is a hybrid processing technology that leverages the principle of total internal reflection of laser beams within water jets to couple high-power pulsed lasers into water streams for workpiece surface treatment. Due to its prominent advantages including high machining accuracy, minimal thermal impact, and broad applicability, this technology has emerged as a preferred solution for processing difficult-to-machine materials. Despite substantial advancements in WJGL over the past few decades, core challenges such as low laser-water jet coupling efficiency, limited stability of micro-scale water jets, and insufficient process adaptability for ultra-hard materials still constrain its industrial scalability. This review not only consolidates existing research findings but also provides critical insights into these bottlenecks and proposes targeted future research directions. This paper first elaborates on the fundamental principles of WJGL machining from three perspectives: laser transmission mechanisms, water jet generation mechanisms, and laser-water-material interaction dynamics. Subsequently, it introduces the application of numerical simulation techniques in WJGL machining processes. Then, the optimized design of key components of WJGL equipment is analyzed, encompassing laser generation and transmission systems, water jet generation systems, and auxiliary equipment. Next, process optimization strategies for WJGL are discussed from two dimensions: machining process improvement and process parameter tuning. Finally, the current application status of WJGL in processing metals, semiconductors, and composite materials is expounded, and future development trends are prospected based on existing technical limitations.</p>