Simulation–optimization (S–O) is a well‐regarded method for solving groundwater (GW) management problems. Although S–O has significantly improved the decision support system for GW management, it still lacks practical applicability. As a result, many researchers have been improving its components, leading to slightly or significantly better performance. To understand these challenges efficiently, this article delves into principal components of S–O that offer in‐depth critical insights into GW's sustainability. The discussed segments are divided into simulation models, optimization methods, categories and conceptualization of management problems, and the formulation of real‐world objective functions. This review also examines surrogate‐assisted simulation models to reduce computational challenges. Methods to address model uncertainty and decision‐making in applying S–O for sustained yield problems are addressed. The review outlays critical steps in S–O methodology and recommends potential research directions to aid researchers in further enhancing the practicality of S–O.