Reclaimed water, serving as a crucial non-conventional water resource, is of great importance in alleviating the structural imbalance between regional water supply and demand, as well as promoting sustainable utilization and optimized allocation of water resources. Against the complex backdrop of escalating global water scarcity, increasing impacts of climate change, and rapid urbanization, advancing the diversified utilization of reclaimed water in a systematic and large-scale manner has become a topic of widespread concern across society and a prominent challenge in the current practice of integrated water resources management and sustainable governance. This paper systematically analyzes the basic connotation and main characteristics of reclaimed water utilization, profoundly explores its utilization status and influencing factors, and summarizes the practical overview and experience of reclaimed water utilization in China and abroad. Based on the practical dilemmas and bottlenecks in the reclaimed water utilization in China, this paper points out that the promotion and utilization of reclaimed water in China still faces multiple challenges, including the need for optimization in the construction and spatial layout of wastewater treatment and reuse facilities, insufficient governmental publicity and guidance, limited public awareness, inadequate maturity of utilization technologies, and an imperfect water pricing mechanism. In response, it is recommended that innovative research and localized applications of reclaimed water be systematically advanced across four dimensions: utilization mode and layout planning, resource allocation and risk prevention and control, water pricing system and market-oriented utilization, as well as incentive policies and guarantee mechanisms, aiming to transition from a “supplementary water source” to a “strategic water source”, thereby providing solid support for water resources security and sustainable development in China.