Indoles and their derivatives have dominated a significant proportion of nitrogen‐containing heterocyclic compounds and play an essential role in synthetic and medicinal chemistry, pesticides, and advanced materials. Compared with conventional synthetic strategies, direct functionalization of indoles provides straightforward access to construct diverse indole scaffolds. As we enter an era emphasizing green and sustainable chemistry, utilizing environment‐friendly solvents represented by water demonstrates great potential in synthesizing valuable indole derivatives. This review aims to depict the critical aspects of aqueous‐mediated indoles functionalization over the past decade and discusses the future challenges and prospects in this fast‐growing field. For the convenience of readers, this review is classified into three parts according to the bonding modes (C−C, C−N, and C−S bonds), which focus on the diversity of indole derivatives, the prominent role of water in the chemical process, and the types of catalyst systems and mechanisms. We hope this review can promote the sustainable development of the direct functionalization of indoles and their derivatives and the discovery of novel and practical organic methods in aqueous phase.