Energy shortage, environmental crisis, and developing customer demands have driven people to find facile, low-cost, environmentally friendly, and nontoxic routes to produce novel functional materials that can be commercialized in the near future. Amongst various techniques, the hydrothermal carbonization (HTC) process of biomass (either of isolated carbohydrates or crude plants) is a promising candidate for the synthesis of novel carbon-based materials with a wide variety of potential applications. In this Review, we will discuss various synthetic routes towards such novel carbon-based materials or composites via the HTC process of biomass. Furthermore, factors that influence the carbonization process will be analyzed and the special chemical/physical properties of the final products will be discussed. Despite the lack of a clear mechanism, these novel carbonaceous materials have already shown promising applications in many fields such as carbon fixation, water purification, fuel cell catalysis, energy storage, CO2 sequestration, bioimaging, drug delivery, and gas sensors. Some of the most promising examples will also be discussed here, demonstrating that the HTC process can rationally design a rich family of carbonaceous and hybrid functional carbon materials with important applications in a sustainable fashion.