Particle-reinforced metal matrix composites (MMCs) produced using the laser powder bed fusion (LPBF) technique have gained considerable attention because of their distinct attributes and properties in comparison with conventional manufacturing methods. Nevertheless, significant challenges persist with LPBF-fabricated MMCs: more design parameters over commercially available alloys and several defects resulting from inappropriate process conditions. These challenges arise from the intricate interaction of material- and process-related phenomena, requiring a fundamental understanding of the LPBF process to elucidate the microstructural evolution and underlying mechanisms of strengthening. This paper provides a comprehensive overview of these intricate phenomena and mechanisms, aiming to mitigate the process-related defects and facilitate the design of MMCs with enhanced mechanical properties. The material processing approach was suggested, covering from material design and LPBF to postprocessing. Furthermore, the role of in situ heat treatment on the microstructure evolution of MMCs was clarified, and several novel, potential strengthening theories were discussed for the LPBF-fabricated MMCs. The suggested strategies to address the challenges and design high-performance MMCs will offer an opportunity to develop promising LPBF-fabricated MMCs, while overcoming the material limitations of LPBF.