Water quality monitoring is a critical part of environmental management and protection, and to be able to qualitatively and quantitatively determine contamination and impurity levels in water is especially important. Compared to the currently available water quality monitoring methods and techniques, laser-induced breakdown spectroscopy (LIBS) has several advantages, including no need for sample pre-preparation, fast and easy operation, and chemical free during the process. Therefore, it is of great importance to understand the fundamentals of aqueous LIBS analysis and effectively apply this technique to environmental monitoring. This article reviews the research conducted on LIBS analysis for liquid samples, and the article content includes LIBS theory, history and applications, quantitative analysis of metallic species in liquids, LIBS signal enhancement methods and data processing, characteristics of plasma generated by laser in water, and the factors affecting accuracy of analysis results. Although there have been many research works focusing on aqueous LIBS analysis, detection limit and stability of this technique still need to be improved to satisfy the requirements of environmental monitoring standard. In addition, determination of nonmetallic species in liquid by LIBS is equally important and needs immediate attention from the community. This comprehensive review will assist the readers to better understand the aqueous LIBS technique and help to identify current research needs for environmental monitoring of water quality.