As lithium-ion batteries approach their theoretical limits for energy density, magnesium-ion batteries are emerging as a promising next-generation energy storage technology. However, progress in magnesium-ion battery research has been stymied by a lack of available high capacity cathode materials that can reversibly insert magnesium ions. Vanadium Oxide (V2O5) has emerged as one of the more promising candidate cathode materials, owing to its high theoretical capacity, facile synthesis methods, and relatively high operating voltage. This review focuses on the outlook of hydrated V2O5 structures as a high capacity cathode material for magnesium-ion batteries. In general, V2O5 structures exhibit poor experimental capacity for magnesium-ion insertion due to sluggish magnesium-ion insertion kinetics and poor electronic conductivity. However, several decades ago, it was discovered that the addition of water to organic electrolytes significantly improves magnesium-ion insertion into V2O5. This review clarifies the various mechanisms that have been used to explain this observation, from charge shielding to proton insertion, and offers an alternative explanation that examines the possible role of structural hydroxyl groups on the V2O5 surface. While the mechanism still needs to be further studied, this discovery fueled new research into V2O5 electrodes that incorporate water directly as a structural element. The most promising of these hydrated V2O5 materials, many of which incorporate conductive additives, nanostructured architectures, and thin film morphologies, are discussed. Ultimately, however, these hydrated V2O5 structures still face a significant barrier to potential applications in magnesium-ion batteries. During full cell electrochemical cycling, these hydrated structures tend to leach water into the electrolyte and passivate the surface of the magnesium anode, leading to poor cycle life and low capacity retention. Recently, some promising strides have been made to remedy this problem, including the use of artificial solid electrolyte interphase layers as an anode protection scheme, but a call to action for more anode protection strategies that are compatible with trace water and magnesium metal is required.