Abstract: The GRACE gravity satellite has revolutionized large-scale terrestrial water storage monitoring. Currently, GRACE satellite data are widely used to estimate terrestrial water storage changes at both global and basin scales. This paper elaborated on the working principles, development history, and current research status of the GRACE gravity satellite in China and abroad. It summarized the application areas of GRACE data, such as groundwater monitoring, evapotranspiration estimation, drought identification, outlines existing challenges and potential improvements. At present, GRACE data still faces limitations including coarse spatial resolution, short time series, and various errors. We proposed that downscaling and multi-source data fusion can enhance the adaptability and reliability of GRACE data. This study may provide references for effective monitoring of terrestrial water storage and related applications, and offer support for addressing the global water crisis.