The frequency range of terahertz waves (THz waves) is between 0.1 and 10 THz and they have properties such as low energy, penetration, transients, and spectral fingerprints, which are especially sensitive to water. Terahertz, as a frontier technology, have great potential in interpreting the structure of water molecules and detecting biological water conditions, and the use of terahertz technology for water detection is currently frontier research, which is of great significance. Firstly, this paper introduces the theory of terahertz technology and summarizes the current terahertz systems used for water detection. Secondly, an overview of theoretical approaches, such as the relaxation model and effective medium theory related to water detection, the relationship between water molecular networks and terahertz spectra, and the research progress of the terahertz detection of water content and water distribution visualization, are elaborated. Finally, the challenge and outlook of applications related to the terahertz wave detection of water are discussed. The purpose of this paper is to explore the research domains on water and its related applications using terahertz technology, as well as provide a reference for innovative applications of terahertz technology in moisture detection.