Agarwood is a resin-containing wood produced by plants of the genus Aquilaria or Gyrinops in the family Thymelaeaceae after being injured naturally or artificially. This unique wood is highly valued as a spice and traditional material and possesses various pharmacological activities such as anti-inflammatory, sedative, and tranquilizing activities. The main chemical components of agarwood are sesquiterpenes and 2-(2-phenylethyl) chromones. Aquilaria sinensis (Lour.) Spreng. is cultivated in China specifically for agarwood production. Over time, artificial agarwood production has largely replaced wild agarwood due to improvements in cultivation and incense technologies. Breeding and application of new agarwood varieties with the advantages of early production, easy induction, and superior quality have addressed the challenges faced by the agarwood industry, such as limited variety, quality differences in artificial agarwood, and lengthy benefit cycles. The detailed chromosome-level genome map of A. sinensis published in 2020 has laid a solid foundation for studying the mechanism by which agarwood is produced, identifying genes involved in the biosynthesis of the bioactive chemical components. This article provides an overview of the progress, to date, in agarwood research, including studies on original plant species, collection and evaluation of germplasm resources, biosynthesis and regulation of active ingredients, agarwood formation, artificial induction technology, and future research prospects. Its aim is to provide theoretical guidance and technical aid for further research on agarwood, ensuring the sustainable growth of the industry.