Abstract: Carbonated water injection (CWI) is a promising enhanced oil recovery (EOR) technology that has received much attention in co-optimizing CO2 storage and oil recovery. This study provides a comprehensive review of the fluid system properties and the underlying changes in rock–fluid interactions that drive the CWI-EOR mechanisms. Previous research has indicated that CWI can enhance oil recovery by shifting reservoir wettability towards a more water-wet state and reducing interfacial tension (IFT). However, this study reveals that there is still room for discussion in this area. Notably, the potential of CWI to alter reservoir permeability has not yet been explored. The varying operational conditions of the CWI process, namely temperature, pressure, injection rate, salinity, and ionic composition, lead to different levels of oil recovery factors. Herein, we aim to meticulously analyze their impact on oil recovery performance and outline the optimal operational conditions. Pressure, for instance, positively influences oil recovery rate and CWI efficiency. On one hand, higher operating pressures enhance the effectiveness of CW due to increased CO2 solubility. On the other hand, gas exsolution events in depleted reservoirs provide additional energy for oil movement along gas growth pathways. However, CWI at high carbonation levels does not offer significant benefits over lower carbonation levels. Additionally, lower temperatures and injection rates correlate with higher recovery rates. Further optimization of solution chemistry is necessary to determine the maximum recovery rates under optimal conditions. Moreover, this review comprehensively covers laboratory experiments, numerical simulations, and field applications involving the CWI process. However, challenges such as pipeline corrosion, potential reservoir damage, and produced water treatment impact the further application of CWI in EOR technologies. These issues can affect the expected oil recovery rates, thereby reducing the economic returns of EOR projects. Finally, this review introduces current research trends and future development prospects based on recently published studies in the field of CWI. The conclusions of this study aid readers in better understanding the latest advancements in CWI technology and the strengths and limitations of the techniques used, providing directions for further development and application of CWI.