High‐power all‐fiber thulium lasers have gained considerable interest in recent times due to their distinct characteristics and versatile applications in the medical and industrial sectors. This review article presents a comprehensive examination of the advancements and challenges in this field. It begins with an overview of thulium‐doped silica fiber, which is a critical component for high‐power lasers operating at the 2 µm (micrometer) wavelength band. The research progress of essential high‐power thulium laser sources, including continuous‐wave (CW), quasi‐continuous wave (QCW), and pulsed lasers, is then thoroughly analyzed, highlighting their respective strengths and limitations. Additionally, the diverse applications of high‐power thulium fiber lasers in medical and industrial domains are summarized. Furthermore, the article emphasizes the current challenges in the advancement of high‐power thulium‐doped fiber lasers (TDFLs) and outlines potential avenues for future development. Despite TDFLs being the predominant laser source in lithotripsy and material processing applications, optimizing their performance and expediting further progress in thulium laser technology remain crucial objectives. This review article aims to provide valuable insights for researchers, engineers, and professionals working in the field of high‐power fiber lasers operating at 2 µm.