Transfer RNA (tRNA)-derived small RNAs (tsRNAs) are a new type of non-coding RNAs (ncRNAs) produced by the specific cleavage of precursor or mature tRNAs. tsRNAs are involved in various basic biological processes such as epigenetic, transcriptional, post-transcriptional, and translation regulation, thereby affecting the occurrence and development of various human diseases, including cancers. Recent studies have shown that tsRNAs play an important role in tumorigenesis by regulating biological behaviors such as malignant proliferation, invasion and metastasis, angiogenesis, immune response, tumor resistance, and tumor metabolism reprogramming. These may be new potential targets for tumor treatment. Furthermore, tsRNAs can exist abundantly and stably in various bodily fluids (e.g., blood, serum, and urine) in the form of free or encapsulated extracellular vesicles, thereby affecting intercellular communication in the tumor microenvironment (TME). Meanwhile, their abnormal expression is closely related to the clinicopathological features of tumor patients, such as tumor staging, lymph node metastasis, and poor prognosis of tumor patients; thus, tsRNAs can be served as a novel type of liquid biopsy biomarker. This review summarizes the discovery, production, and expression of tsRNAs and analyzes their molecular mechanisms in tumor development and potential applications in tumor therapy, which may provide new strategies for early diagnosis and targeted therapy of tumors.