The accurate knowledge of hydraulic properties for unsaturated soils is critical in addressing problems in a variety of disciplines such as hydrology, ecology, environmental sciences, soil science, and agriculture. The purpose of this paper is to review the characterization of unsaturated soil hydraulic properties for their applicability in models simulating unsaturated water transport. In a theoretical section, we present the fundamentals for the definitions of the hydraulic properties in the framework of the continuum theory as well as provide the common parameterizations of the hydraulic functions. The characterization and parameterization of hysteresis and the phenomenon of dynamic effects in hydraulic properties are addressed in subsequent sections. Finally we discuss issues related to the handling of spatial and temporal variability, including geostatistical characterization, upscaling, and scale dependency of effective properties. The review closes with a summary on limits and opportunities for modeling water transport with Richards' equation.