Pipelines play a critical role in transporting water, oil, and gas and are indispensable for urban development. However, monitoring underground pipelines is challenging due to the complex environment in which they are situated. Traditional sensors have limitations in all-round and real-time monitoring, while fiber optic sensors offer several advantages, including large coverage, high sensitivity, long sensing distance, and corrosion resistance. As such, fiber optic sensing technology (FOST) has emerged as a promising tool for underground pipeline monitoring. This review article provides a comprehensive overview of FOST, including its basic principles, classification, and research progress in underground pipeline monitoring. Specifically, this article focuses on the technology’s application in monitoring pipeline leakage, deformation, corrosion, and geological natural disasters. In addition, the article highlights the need for future research and development in FOST. For example, combining FOST with artificial intelligence can enhance the accuracy and efficiency of pipeline monitoring. Overall, this review article offers valuable insights into the potential of FOST for underground pipeline monitoring and provides essential guidance for future research in this field.