The introduction and development of shield tunnels have led to the innovation of precast segmental linings, which has significant advantages in improving the construction speed compared with in-situ cast concrete linings. However, damage of the linings and water leakage at the lining joints highlight defects in the design and construction of the linings. In this regard, it is necessary to investigate the failure mechanism of linings for shield tunnels and evaluate the waterproofing performance and repercussions of lining joints. The relevant research results published in recent years are reviewed in this paper, focusing on the failure mechanisms of linings and the waterproofing performance of lining joints. Progressive failure and instability of linings are introduced. Progressive failure has three stages: initial elastic stage, local damage stage, and overall failure stage. The performance-based design of joint waterproofing is described in seven steps. Further opportunities for the investigation of this topic are discussed.