The unique combination of excellent mechanical and functional properties makes graphene an ideal component for high-performance ‘smart’ composites, which are sensitive to thermal, optical, electrical and mechanical excitations, hence being potential in application of a range of sensors. It has confirmed that the addition of graphene into metal matrix can significantly enhance the mechanical property and deliver surprising functional properties. Thus, graphene reinforced metal matrix composites (GMMCs) have long been regarded as potential prospects of nanotechnology applications. Recently, researchers mainly focused on: (i) solving the interfacial issues and realizing controllable alignment of graphene in metal matrix to achieve optimal performance; (ii) reasonable designing of the microstructures basing on usage requirement and then fabricating via efficient technique. Thus, it is necessary to figure out key roles of microstructure in fabrication process, mechanical and multi-functional properties. This review consists of four parts: (i) fabrication process. The fabrication processes are firstly divided into three kinds basing on the different bonding nature between graphene and metal matrix. (ii) Mechanical property. The microstructural characteristics of metal matrix accompanying by the incorporation of graphene and their vital effects on mechanical properties of GMMCs are systematically summarized. (iii) Functional property. The crucial effects of microstructure on electrical and thermal properties are summarized. (iv) Prospect applications and future challenges. Application and challenges basing on the research status are discussed to provide useful directions for future exploration in related fields. All these four parts are discussed with a focus on key role of microstructure characteristics, which is instructive for the microstructures design and fabrication process optimization during academic researches and potential commercial applications.