SummaryLocation‐based underwater communication applications such as strategic surveillance, disaster prevention, marine research, and mine detection have given the field of underwater wireless sensor networks (UWSN) a head start. Node localization is a prerequisite for accurate data collection, target monitoring, and network management in UWSNs. However, the unique characteristics of the underwater environment, such as signal attenuation, multipath propagation, and variable acoustic properties, pose a major challenge to effective node localization. Accurate sensor node location data is essential for successful underwater data collection, but difficult to achieve as the GPS system cannot be used in an underwater environment. In this paper, existing node localization techniques such as ALS, SLUM, MASL, SLMP, UDB, USP, etc., and recent advances such as the fusion of range‐based and range‐free techniques, the fusion of RSSI and AoA to improve localization accuracy by using directional information in addition to signal strength, and the use of optimization techniques such as PSO, COA, and WOA algorithms to improve the accuracy of the applied node localization algorithm, e.g., TP‐TSFLA, and challenges related to UWSN are discussed. Also, different localization algorithms that affect the accuracy of UWSN localization techniques have been evaluated and compared with NS2 in terms of localization error, localization coverage, energy consumption, and average communication cost metrics. In addition, this paper also provides an up‐to‐date investigation of localization techniques. Finally, the tools available for simulation are presented, followed by open research questions that need to be addressed in the localization of nodes.