Owing to carbon materials’ diverse functionalization and versatility, the design and synthesis of carbon-based three-dimensional porous structures have become important foundational research topics across various fields. Among the various methods for producing porous carbon structures, laser-induced graphene (LIG) has garnered attention because of its large surface area, controllable structure, excellent electrical conductivity, scalability, and eco-friendly synthesis process. In addition, recent research results have reported more novel functionalities by advancing further from the unique characteristics of LIG through functionalization or compounding of LIG, making it an attractive material for various applications in electronic devices, sensing, catalysis, and energy storage. This review aims to update the research trends in LIG and its functionalization, providing insights to inspire more interesting studies on functional LIG to expand its potential applications ultimately. Starting with the synthesis method and material characteristics of LIG, we introduce the functionalization of LIG, which is classified into surface modification, heteroatom doping, and hybridization based on the interaction mechanism. Finally, we summarize and discuss the prospects of LIG and its functionalization.