The digitalization of urban mechanisms relies on the integration of digital terrain and 3D city models. However, a systematic examination of this topic within the context of integrated smart cities or digital twins has been lacking, hindering reproducibility and interpretation of results. To address this gap, this study conducts a systematic literature review to explore the role of digital terrain and 3D city models in supporting urban decision-making for integrated smart cities or digital twins. By following a review protocol, research questions were formulated, and systematic search strategies were implemented involving reputable databases such as Scopus, Web of Science, Science Direct, Emerald, Taylor Francis, Springer Link, and Sage Journals. The review process included identification, screening, eligibility assessment, quality appraisal, data extraction, and thematic analysis. The thematic analysis identified eight main themes and 22 sub-themes, shedding light on various aspects of digital terrain and 3D city models in urban decision-making, including (1) data integration and interoperability, (2) integrated visualization; (3) environmental simulation; (4) digital twins application; (5) smart cities application; (6) semantic enrichment; (7) applied planning; and (8) urban planning. This systematic review identifies gaps in the field and provides directions for future studies.