Metal-matrix electrodeposited composite coatings with specific characteristics have garnered increasing interest from researchers and businesses across diverse industries, including aerospace, automotive, marine, electrical, and wind energy. This comprehensive review critically examines the key challenges involved in fabricating these coatings through composite electrodeposition. It explores a range of deposition methods, techniques for modifying particle surfaces, different types of metal matrix composites, the impact of various parameters on composite electrodeposition, approaches to enhance particle stability, and the influence of bath parameters on coatings’ microstructure. The review thoroughly analyzes the advantages and limitations associated with each topic, providing insights into the underlying mechanisms for creating coatings with well-dispersed particles. Furthermore, it highlights recent advancements and presents promising opportunities for future research, aiming to expand the scope of applications for composite electrodeposited coatings.