SF6 or SF6/N2 insulated circuit breakers are widely used in high-voltage power grids, especially ultra-high voltage grids, due to their advantages such as high dielectric strength across the breaker contacts, excellent breaking performance, long maintenance intervals, and small footprint. In recent years, the phenomenon of SF6 decomposition under arc action has received significant research attention. However, there has been no systematic review of the research progress on this topic in the literature so far. This paper reviews the decomposition mechanism of SF6 under arc action, the characteristics and key influencing factors of gas decomposition, and its applications. The high temperature of the arc can cause deep decomposition of SF6, N2, and other gases, forming highly reactive atoms such as sulfur and fluorine or sulfur fluorides, which can further generate a variety of gas decomposition products such as SOF2, SO2, and solid metal fluorides. These processes are influenced by factors such as arc energy, gas mixture ratio, breaking current, electrode materials, and test methods. Detecting SF6 decomposition products holds promise for effectively assessing the condition of circuit breakers. It is necessary to continue research on condition monitoring methods and applications in the future.