The contemporary production of carbon materials heavily relies on fossil fuels, contributing significantly to the greenhouse effect. Biomass is a carbon‐neutral resource whose organic carbon is formed from atmospheric CO2. Employing biomass as a precursor for synthetic carbon materials can fix atmospheric CO2 into solid materials, achieving negative carbon emissions. Hydrothermal carbonization (HTC) presents an attractive method for converting biomass into carbon materials, by which biomass can be transformed into materials with favorable properties in a distinct hydrothermal environment, and these carbon materials have made extensive progress in many fields. However, the HTC of biomass is a complex and interdisciplinary problem, involving simultaneously the physical properties of the underlying biomass and sub/supercritical water, the chemical mechanisms of hydrothermal synthesis, diverse applications of resulting carbon materials, and the sustainability of the entire technological routes. This review starts with the analysis of biomass composition and distinctive characteristics of the hydrothermal environment. Then, the factors influencing the HTC of biomass, the reaction mechanism, and the properties of resulting carbon materials are discussed in depth, especially the different formation mechanisms of primary and secondary hydrochars. Furthermore, the application and sustainability of biomass‐derived carbon materials are summarized, and some insights into future directions are provided.This article is protected by copyright. All rights reserved